REDUCTION IN THE AMOUNTS RECOVERABLE BY EMPLOYERS WHO HAVE PAID STATUTORY SICK PAY

HC Deb 05 February 1991 vol 185 cc176-227

Lords amendment: No. 1, in page 1, line 12, leave out ""so paid"" and insert ""by making""

Mr. Newton

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Speaker

With this, it will be convenient to discuss the remaining Lords amendments.

Mr. Newton

This small Government amendment is designed to pave the way for others. It was accepted in another place, but it does not form the major focus of our debate. I shall seek to discuss the issues raised by all the amendments, including the Government amendments to one of the Lords amendments.

In setting the case before the House, it is sensible for me to remind hon. Members that the Bill deals with only two aspects of a much wider package of changes, some of which will come before the House in other ways. However, they will need to be discussed and considered as a whole. I am sure that that will seem to be a sensible procedure both to the Opposition and to my hon. Friends.

The Bill proposes to reduce the rate of reimbursement for employers' payments of statutory sick pay from 100 per cent. to 80 per cent. It also—this is a small matter but it should at least be noted—ends the arrangements whereby employers are able to claim reimbursement of the national insurance contributions paid on statutory sick pay. That arrangement was introduced only in 1985 after the introduction of statutory sick pay and has not worked very well in practice. Some 25 per cent. of the compensation due under that heading does not appear to be claimed, despite the various efforts which have been made to draw it to the attention of employers.

Alongside the proposals in the Bill, we have also proposed to leave the higher rate of statutory sick pay unaltered, at £52.50 per week, while increasing the lower rate from £39.25 to £43.50 and to extend the earnings bands to which the lower rate applies.

Another point—perhaps the most important from the point of view of the balance of our debate, and one that has not been given its due weight in much that has been said and written on these matters in recent weeks—is that we have proposed a significant reduction in the national insurance contributions payable by employers, weighted towards giving greater help in particular to the employers of those who are less well paid, who tend disproportionately to be small employers. We shall undoubtedly return to that point.

Taking all three elements together, we have what may broadly be described as about £350 million on one side of the account—mostly through reduced expenditure—and £250 million on the other side, in the form of reduced employers' contribution rates, leading to a net overall effect for employers of around £100 million.

To put that figure in context, I should make two main points. First, total labour costs in our economy are about £300 billion. Thus, the £100 million represents about 0.03 per cent.—less than one twentieth of 1 per cent. of the labour costs of industry as a whole.

The second is a rather wider point—that this very limited change should be seen in the light of trends well established over many years. Support for those in employment who are sick for short periods has, as a matter of experience and observation, moved increasingly from being something for which the state alone has been responsible to being a partnership between the state and employers, with the latter taking an increasingly important share.

Mr. Peter Thurnham (Bolton, North-East)

My right hon. Friend has stated the costs as percentages of employers' overall costs. Another way of putting it is to say that the average cost to an employer is only £5 per annum per employee. Does my right hon. Friend agree that it is surprising that, as the cost is so low, there has been so much opposition to the Bill? Does not the director of the CBI seem to be arguing about mere bantam feed?

Mr. Newton

I have not done precisely the calculation that appears to underlie my hon. Friend's point, but I think that its basic thrust is right. Of course, one must allow for the fact that a significant number of employees—I am thinking, in particular, of part-time employees who deliberately keep their earnings below the lower limit—will not qualify for statutory sick pay at all. Perhaps that affects my hon. Friend's figures to a small extent.

Mr. Richard Shepherd (Aldridge-Brownhills)

We should be very careful about using averages. As the incidence is unequal, the burden on companies will be disproportionate. That is the essence of the Bill and of the opposition to it.

Mr. Newton

My hon. Friend is seeking to lead me on. I promise that it will not be long before I come to discuss the small employers, who, obviously, are less able to be certain that the averages will apply to them. On the whole, it is true that the larger a firm or undertaking, the more likely it is that the averages will apply in its case. I understand well that that is the cause of some of the concern about small employers that has led to a number of the proposed amendments. At an earlier stage the Government gave a clear-cut undertaking that we would try to meet the concern expressed on behalf of small employers about averages not applying to them. I am seeking, with some amendments to the Lords amendments, to fulfil that undertaking.

Sir Robert McCrindle (Brentwood and Ongar)

Before the Secretary of State moves on to what I know will be the kernel of the debate—the effects of these measures on small companies—will he take on board the fact that some large companies, for which, I understand, there may be less sympathy, are faced with a very considerable additional bill? I am told that Marks and Spencer will have to pay £600,000 extra. I think it is fair to say that there was a clear implication that Government reimbursement of 100 per cent. of the cost was the basis on which the original scheme was introduced. Does not my right hon. Friend think that it would be wise to say just a few words about the movement away from that basic principle, which caused some of us to support the original scheme some years ago?

Mr. Newton

I am very happy to say a few words about that matter. Perhaps I should preface my remarks by saying that a point along the lines of that which my hon. Friend has just raised was made by a number of people in business. Naturally, as a consequence, I have had a very careful search made of everything that was said in the House and of any other traceable comments that were made when these proposals were being discussed very nearly a decade ago. I have been quite unable to find any commitment of the kind that my hon. Friend implies existed. Moreover, during that decade there have been two changes of Parliament.

It is well understood that Governments must take a new look at circumstances as they change. Two of the changes in circumstances to which I was about to refer are the spread of occupational sick pay schemes and the rising pressure of other demands. My hon. Friend is noted for his support for demands for expenditure on forms of social security which employers cannot possibly be expected to provide.

Mr. Michael Meacher (Oldham, West)

The Secretary of State says that he has checked the sources of this commitment. Has he examined the proceedings of the Conservative party conference? Is he aware that on 15 October 1981 the right hon. Member for Sutton Coldfield (Sir N. Fowler), his predecessor, gave a clear and unequivocal commitment that there would be 100 per cent. reimbursement? As the hon. Member for Brentwood and Ongar (Sir R. McCrindle) said, that was the basis on which the original scheme was introduced. Is he unaware of that, or is the Conservative party conference not a serious public body?

Mr. Newton

My right hon. Friend's remarks were directed to the outcome of the negotiations on the original statutory sick pay scheme. My noble Friend Lord Jenkin, who was responsible for most of the negotiations prior to the introduction of SSP, has not suggested any express or implied commitment that there would never be a stage at which, regardless of developments surrounding occupational sick pay schemes or other demands on the social security system, a future Government would consider the balance of provision. Indeed, it would not have been possible to make such a meaningful commitment that would stand for ever.

Mr. Frank Field (Birkenhead)

Is not the Secretary of State trying to confuse two issues to his own advantage—first, whether a commitment was given and where it was given and, secondly, whether events have moved on since and whether other developments have overridden the original commitment? Will the right hon. Gentleman answer the point that my hon. Friend the Member for Oldham, West (Mr. Meacher) put to him? Was that commitment given to the Conservative party conference?

Mr. Newton

I have already answered the point made by the hon. Member for Oldham, West (Mr. Meacher). I cannot add to what I have said.

Mr. Frank Field

Yes or no.

Mr. Newton

The hon. Gentleman asked whether there had been developments in the intervening period. One of the developments, to which I have referred several times, has been the continuing growth of occupational sick pay schemes. The latest survey in 1988 showed that they are used by employers responsible for more than 90 per cent. of the work force. At the same time—the hon. Member for Oldham, West has tended, not to disguise, that would be unfair, but not to acknowledge this point significantly clearly—there has been particularly rapid growth in occupational sick pay schemes for manual workers. The old caricature was that staff had occupational sick pay schemes but manual workers were left to cope for themselves. There has been a significant change in that respect since the mid 1970s.

Ms. Clare Short (Birmingham, Ladywood)

I wish to take the Secretary of State back to the point made by the hon. Member for Bolton, North-East (Mr. Thurnham), who claimed that the cost to employers is small because although there is a drop in reimbursement from 100 per cent. to 80 per cent. there is an offsetting cut in national insurance. Will the right hon. Gentleman confirm that that is a one-off and that there is no promise for future years? This is an insidious proposal which, in time, will cost employers more and more. Will he put that on the record?

4.45 pm

Mr. Newton

I do not see how it can cost more. Contribution rates are calculated as a percentage of earnings. As earnings rise, the value of the reductions in national insurance contributions will rise. I am not in a position to speculate about decisions on future rates of statutory sick pay, or on what employers would do if they chose to go further in the development of occupational sick pay schemes. The Bill seeks to fix a proportion of the amount of statutory sick pay which employers would be expected to shoulder for themselves rather than pass on to the state and a reduction in national insurance contributions, which, as long as percentage rates of contributions remain unchanged, will rise in value to employers with the natural growth in earnings. I hope that that is reasonably clear.

Mr. Allen McKay (Barnsley, West and Penistone)

Employers' organisations calculate that it will cost employers £100 million to implement the scheme. Is the Secretary of State saying that that is untrue?

Mr. Newton

On the contrary. A fairly substantial paragraph in my speech, which I probably read some minutes ago because I willingly accepted several interventions, related that to the total of employers' labour costs in the economy. There is roughly a £100 million gap between one side of the account and the other. That is equivalent to less than one twentieth of 1 per cent. of labour costs in the economy.

Mr. Paul Flynn (Newport, West)

The Minister has repeated the claim that was made in the last debate that 91 per cent. of the work force are covered by occupational pension schemes. The IFF Research Ltd. report says something quite different—that 91 per cent. of employers have sick pay schemes that cover some employees in some circumstances. That is all, and the percentage covered is nearer 48 per cent. or 50 per cent.

Mr. Newton

I think that my remarks were accurate and reflected what the hon. Gentleman has just said.

Ms. Short

The Secretary of State is being economical with the truth.

Mr. Newton

If the hon. Lady, from a sedentary position, is accusing me of being economical with the truth I shall do my best to restrain what would normally he my natural irritation.

Some of the points towards which the hon. Member for Newport, West (Mr. Flynn) seems to be edging run the risk of being somewhat misleading. Of course there are exclusions from occupational sick pay schemes, but they are not, on the whole, exclusions of the old-fashioned gentleman versus players kind. There is increasing coverage of those in manual occupations. The exclusions from occupational sick pay schemes usually relate to a brief period at the start of a new job. There may be a qualifying rule that an employee must be with the firm three or six months before qualifying. That is not unreasonable, and as a matter of established record people tend to experience little sickness in the early months of a new job.

The other main exclusion is part-time employees. The Opposition have tended to place too much weight on this point—I can see where their argument is leading—because, by and large, the earnings of part-time employees qualify them only for the lower rate of statutory sick pay, which is being fully uprated and which was fully uprated last year. If I get the drift of where the hon. Member for Newport, West is seeking to take me, which is a bit aside of the main thrust of the debate, he will see that I do not really agree with what he is trying to say.

Mr. Richard Shepherd

My hon. Friend seems to he linking the reduction in national insurance contributions with the statutory sick pay proposal. As I understand what my right hon. Friend the Minister for Social Security and Disabled People said in earlier discussions, there is no link: they stand independently of each other. It is therefore misleading of my right hon. Friend the Secretary of State to link them together as though it is a cost reduction. He might just as well cite those who have saved on the uniform business rate as being better able to make a payment on a different account. That link is misleading.

Mr. Newton

That is a little unfair of my hon. Friend., I have made it quite clear on this and on several other occasions that distinct judgments must be made. The Bill does not cover national insurance contributions. The House will be invited to discuss a national contributions order in due course. The judgment that I made on what it is sensible to do in respect of SSP—this should already he clear—was informed by a parallel judgment that I had made about what I could do for employers on national insurance contributions. That was a perfectly sensible way for me to have approached the matter, and one which most hon. Members would support.

Mr. Gerald Howarth (Cannock and Burntwood)

We acknowledge the difficult task which my right hon. Friend has in trying to juggle the social security budget, particularly in dealing with the Treasury. That is well understood. Is my right hon. Friend aware that it is not simply the additional cost about which my constituents are concerned but the fact that, when statutory sick pay was introduced, they were required to administer what was essentially a Government system on behalf of the Government, and that that imposed burdens on industry? Had they been told then that they would not get 100 per cent. reimbursement, I suspect that their answer would have been, "You can stuff your scheme and do it yourselves."

Mr. Newton

This is another area about which there has been prolonged argument. I have already referred to the rather strange and not particularly effective arrangement for compensation for national insurance contributions paid on SSP itself. That is the nearest that anyone has ever come to compensating employers directly for their administration of the scheme. My hon. Friend will find that at the outset there was not any form of direct compensation. That was one of the points at issue. In retrospect, the majority of employers have found the SSP scheme easier to administer than they had originally expected. All the evidence is that it is now generally working well, with relatively little burden for employers. I do not seek to say this in a bland way, but in some respects what I am proposing, with the elimination of the rather strange compensation for the NICs bit of the scheme, will make it simpler than it is at present.

Mr. Michael Grylls (Surrey, North-West)

As I have said before to my right hon. Friend, it seems an extraordinary time to introduce added burdens for business, and above all for small business. My right hon. Friend will be able to draw away some of the criticism if he can tell us what the net effect will be on a firm with five or six employees, on average earnings, if one employee is off sick for six months. Will there be a net added cost to the firm, or will it gain? There is concern about the danger of added cost to a very small firm. If my right hon. Friend can assure the House that the new proposals sort out that problem, he will have answered quite a lot of criticism.

Mr. Newton

I shall be coming in a few moments to the case of small firms, both of the kind mentioned by my hon. Friend and others. He has referred to an employee being sick for six months. The main purpose of a significant concession in one of the rather complex Government amendments, relating back to an earlier amendment in another place, is to provide that small employers, defined on a fairly generous basis, can go back to 100 per cent. reimbursement in respect of any employee who is sick for more than six weeks. That is a significant end-stop safeguard for exactly the kind of problem that my hon. Friend has raised.

Mr. James Wallace (Orkney and Shetland)

The Secretary of State has introduced a complex Government amendment referring to six weeks. Can he give us an insight into Government thinking on this? My understanding is that all the discussions in another place were based on studies which showed that the average length of sickness was three weeks. It seems that the period of six weeks has been plucked out of the air without any principle behind it. If the Secretary of State is making a serious attempt to be helpful to small businesses, why does he not make the period three weeks?

Mr. Newton

In a nutshell, the position is that quite a number of small businesses will still be in pocket overall as a result of my proposals, because the national insurance contribution rate reductions have been geared especially to smaller employers, via being geared to lower paid employees. There will still be a large number of employers who will be better off on a straightforward calculation of the balance between the extra SSP which they have to pay and the reduced contributions from which they benefit, even up to twice average sickness, which would be one employee being sick for six weeks in the case which the hon. Gentleman seems to have in mind. We have chosen a number of weeks which we think will safeguard those employers who might otherwise be affected by rates of sickness significantly above average. I hope that I will be able to make the point clearer later in my speech.

Miss Emma Nicholson (Torridge and Devon, West)

Does my right hon. Friend agree that sickness management is an employer responsibility, that the Government have gone far enough in offering assistance to employers to look after the sickness management of employees, that any responsible employer already takes care of sickness management and that more employers should do so? I support the Bill.

Mr. Newton

That point has been made by a number of commentators, including most recently The Times in an editorial today, and the Financial Times in an editorial a week or two ago; certainly the point should not be overlooked in the argument. Indeed, I find it mildly ironic that the CBI has published a survey suggesting that British industry is cost many billions a year by absenteeism and pointing to the more determined methods to keep absenteeism under control which are used in some other countries. I have not sought to put great weight on that argument, and I do not want to mislead my hon. Friends or anybody else. There may be some force in it but it is not the reason for the proposals being brought before the House, and I do not pretend that it is.

I want to come briefly, I hope—otherwise there will be no opportunity for anyone else to speak—to the major reason why the proposals have been brought before the House. As I have said, against the background of the continued expansion of occupational sick pay schemes, not least into the manual work force, we felt that it was right to make a limited further adjustment in the balance of provision as between the state and employers. I must underline that point. We have taken account of the many understandable demands pressed upon the social security budget for purposes for which employers certainly cannot be expected to provide—for example, the less well-off pensioners for whom I found nearly another £100 million in the uprating, following £200 million in the form of extra premiums in October 1989,for those who need help in residential care or nursing homes, for whom the uprating statement brought nearly another £250 million, and for those who are long-term sick and disabled. Certainly there has been a very wide welcome for the measures which I was able to announce to help precisely those groups and, indeed, for the earlier announcement of major improvements in disability benefits worth some £300 million, which the House will debate on Thursday.

Mr. Tony Speller (Devon, North)

No one can disagree with the wish of my right hon. Friend to help the disadvantaged. But why does he do that by disadvantaging small business? That is where I do not see the logic.

Mr. Newton

I am coming to small business. I think my hon. Friend will find that many small businesses are on balance advantaged rather than disadvantaged by the proposals which I have brought before the House.

I seek to conclude this part of my speech by saying simply—this is directly related to the point which my hon. Friend has raised—that the first question the House must address in considering the amendments is whether, in relation to the improvements in social security which we are making, which are worth many hundreds of millions of pounds for purposes commanding universal support, which have been pressed on me by many of my hon. Friends and by many Opposition Members, and on which I am constantly pressed to go further, it is reasonable to ask for a modest contribution from industry amounting to a small fraction of the improvements and amounting to less than one twentieth of 1 per cent. of their labour costs. The purpose of the main Lords amendment—amending 80 per cent. to 91 per cent.—is to eliminate even that very small contribution from employers to the improvements in social security to which I have referred. It is not realistic for that to be the position and I cannot, therefore, advise the House to accept Lords amendment No. 3.

5 pm

Sir Robert McCrindle

I have listened carefully to what my right hon. Friend has said in response to the intervention by my hon. Friend the Member for Devon, North (Mr. Speller). Is he telling us that as we evaluate the desirable advances in social services provision—over which he has presided and for which I give him full credit —we must offset against that the possibility that employers, whether small or large, will have to make some contribution? Should we be wise to assume that it is no longer correct to take as sacrosanct other schemes, such as statutory maternity pay? Is my right hon. Friend telling us that an occasion may arise when, as he is doing today with statutory sick pay, he may find it necessary to make the employer additionally responsible for the maternity scheme, if that is the price that we have to pay for improving social benefits?

Mr. Newton

There are two separate points in my hon. Friend's intervention. If significant improvements in social security, or in any other form of spending on welfare or for other purposes, are undertaken, there is no way in which employers collectively—industry as a whole—can be insulated from the effects. The costs will have to fall somewhere. If the hon. Member for Oldham, West were allowed the chance—and we all devoutly hope that he will not be—he would raise the overall rate of employers' national insurance contribution, he would raise the rate of corporation tax and he would almost certainly raise the rate of income tax in a way that would cause a great deal more difficulty to many small businesses than any of my proposals in the Bill.

Mr. Meacher

I did not think that I needed to make this point to the House. However, what the Secretary of State has just said is wholly groundless. There is not a single shred of evidence in anything that I have ever said or written that would justify his comment. If that is the only basis on which he can justify these impositions on small businesses, it shows his arguments totally lack support.

Mr. Newton

Only this weekend, I saw in one of the Sunday newspapers a reiteration by one of the hon. Gentleman's colleagues who has recently joined the Opposition Front Bench of what purported to be a Labour promise to pay additional pensions. Would the hon. Gentleman like to say how that will be paid for?

Mr. Meacher

That question is wholly irrelevant to our discussion today. But as the right hon. Gentleman has raised it, I will answer. We made it perfectly clear in our policy document—there was no great revelation in a Sunday newspaper—that, unlike the Government, we believe that older pensioners who are aged over 75 or 80 are completely without extra support, bearing in mind the way that the Government have cut the earnings relation when uprating pensions. We believe that those older pensioners need extra assistance. We intend to provide that, partly through the state earnings-related pension scheme and, if necessary, through some additional pension.

Mr. Newton

I may have evaded one or two questions in my time, but I have never heard a question so wholly and hopelessly evaded in response to an entirely reasonable request. If one makes promises of several billion pounds of additional expenditure from the national insurance fund—

Mr. Meacher

No.

Mr. Newton

The hon. Gentleman seems to be going round the country—and some of his hon. Friends certainly are—promising several pounds a week extra to 10 million pensioners. If he can explain how he will fund that without a major increase in national insurance contributions, either at the expense of employees or, far more likely, at the expense of employers, I should be happy to listen. The point that I want to make to my hon. Friend the Member for Brentwood and Ongar (Sir R. McCrindle) is that none of that could be cost free. I do not want to turn this debate into a wrangle with the Opposition. However, I must make the point that in one form or another, the business community and individuals, according to the balance of judgment that particular Governments take, would have to find the cost of improvements to social security.

I do not ask my hon. Friends to say that they think that we have got the balance of judgment right in everything that we have done over the past 10 years, but I ask them —and I address this especially to my hon. Friend the Member for Brentwood and Ongar, who has a commendable track record in urging various improvements—to accept that it is difficult for the Secretary of State for Social Security to make all the improvements and then not to receive support for some of the ways in which one has to find room to manoeuvre to make them. I ask for understanding at least in that respect and I suspect that I have it from my hon. Friend the Member for Brentwood and Ongar, who is not only honourable, but an old friend from Essex in many other ways.

Ms. Short

But not Essex man?

Mr. Newton

The phrase "Essex man" had not come into my mind either as a description of myself or of my hon. Friend, but it cannot be denied that we both come from Essex.

I have explained the strategic background to the proposals, so I want to come directly to the position of small employers, which has been the subject of particular concern, as has been clear this afternoon, even among those—and there are many—who accept the general approach that I have described. I turn now to Government amendments (a) to (e) to Lords amendment No. 7, which set out the Government's proposals for assisting small employers who experience abnormal levels of sickness in their work force on the basis of enabling them to revert to a 100 per cent. reimbursement after an employee has been sick for a specified time.

Many hon. Members who have studied the debate in another place will know that my noble Friend Lord Henley tabled an amendment on Report on the Government's behalf. The Government had already clearly shown that they were listening to that concern. The amendment formed the basis of the new clause today. It was further amended on Third Reading in another place when more specific proposals were written in, to which I shall return in a moment.

I want to say a word or two about the background. It is again important to recognise that the effects of the changes in statutory sick pay in the Bill are not sensibly seen in isolation from the proposals that I have announced for reductions in employers' national insurance contributions. To repeat a point that I have made in response to several interventions, although the reductions go right across the spectrum of employers' contributions, they have been weighted deliberately in favour of small employers who are more likely to have employees on the lower contribution rates. For employees earning up to £185 a week, the proposed reduction in the employers' contribution is 0.4 per cent. against 0.05 per cent. where the employee earns above that sum.

If the small employer suffers average sickness levels in his work force, the contribution reductions will more than offset the reduced SSP reimbursement rate. I gave a number of examples when we last debated the Bill in this House, as did my noble Friend the Under-Secretary of State in another place. However, in the light of this afternoon's discussion, it may be helpful for me to give one or two further examples.

If an employer has five employees all earning £170 a week and one of those employees is away for a total of three weeks in the year, which is the average incidence of sickness, there will be a net gain to the employer of £94.39. That assumes not only the 80 per cent. reimbursement, but that the employer tops up the difference between the lower and higher rate of statutory sick pay under an occupational sick pay scheme. That will not be true in all cases and, where it is not, the gain to the employer will be larger. Even on the least good basis that I can take, there will be a gain of almost £100 a year to the employer. Even if the employee is away for six weeks in the year—that is, twice the average incidence of sickness—there would still, on the relatively unfavourable basis from my point of view, be a modest gain of £11.98.

If the employer had 10 employees in that earnings range and experienced the same incidence of sickness, the savings would be £188.78 and £23.96 respectively, while an employer with 20 employees all earning £170 would gain £377.56 with four employees sick for three weeks, and just under £48 if the four were away for six weeks.

I hope that I have said enough, because, clearly, those examples can be multiplied almost indefinitely, to indicate that, in a number of perfectly reasonable representative cases, even allowing for above-average sickness, a large number of employees and employers would gain from my proposals taken as a package, although not, of course, if we look only at the proposals in the Bill, but they are integral with the reductions in national insurance contributions. It is very important that I should underline that point with all the emphasis at my command.

Mrs. Elizabeth Peacock (Batley and Spen)

My right hon. Friend will know that I have made representations to him about all the extra money that he has already announced. I support his long battles with the Treasury, although I am not sure whether I agree with this one. However, will my right hon. Friend reassure the House and many other people that the scheme will not discriminate against those who have more sickness than others? There are bound to be people in work who, for whatever reason, need more time off because of their illnesses. There is great worry that they will be discriminated against by a company that decides that it cannot afford to take them on because they would be off work more often than an average employee.

Mr. Newton

I shall refer later to the main thrust of what my hon. Friend says because it is related to the amendments. Her general point has been raised on several occasions. It was a main argument for not opting for a statutory sick pay scheme in the first place. There has been no evidence of which I am aware that the introduction of statutory sick pay, or any of the changes that have been made in it, have had the effect that my hon. Friend fears, often relating to disabled people in particular. Indeed, a recent survey suggests that disabled people in general have less sickness than many other people in the population. There is no need for employers to have that anxiety. There is no evidence that that anxiety has had a significant effect.

Obviously, there are difficulties for disabled people in gaining employment. Those difficulties need to be tackled in other more specific and direct ways. My right hon. Friend the Minister for Social Security and Disabled People has some responsibility, and my right hon. and hon. Friends in the Department of Employment have a wide variety of schemes. I am sure that the effect of those is much more significant than anything contained in the proposals.

Several Hon. Members

rose—

Mr. Newton

In one of the increasingly numerous intervals in which I have been sitting rather than standing, I have gathered that there is some concern about the little time that will be left for other hon. Members to take part in the debate. In view of the extent to which I have given way, it would be sensible for me to make some progress.

I have just given some examples of small firms—

Ms. Short

Will the right hon. Gentleman give way?

Mr. Newton

The hon. Member for Birmingham, Ladywood (Ms. Short) or her hon. Friend the Member for Oldham, West will no doubt have an opportunity to make a substantial speech. It would be sensible now for me to make progress.

Ms. Short

The right hon. Gentleman is misleading the House.

Mr. Newton

I knew that it would be a mistake to give way to the hon. Lady. The trouble is that, when one does not give way to the hon. Lady, she simply falls back on interventions from a sedentary position.

Ms. Short

It is an important point.

5.15 pm

Mr. Newton

I have acknowledged persistently and repeatedly that there is a balance of £100 million—a tiny fraction though that is—of labour costs as a whole and that, therefore, not everybody can be gainers. However, the points of concern that have been mentioned by hon. Members and that have come in profusion from other quarters as well are being addressed in particular to the position of small businesses.[Interruption.] I cannot say for all small businesses, although we certainly hope to make sure that it will be virtually all small businesses. On any reasonable assessment of what they will be required to pay in SSP and what they will gain in reduced national insurance contributions, taken with the safeguard to which I am about to refer, very large numbers of small businesses are likely to be gainers from the proposals, and not losers. That is clear whichever way one looks at the statistics.

Mrs. Margaret Ewing (Moray)

Will the right hon. Gentleman give way?

Mr. Newton

In fairness to Scotland, I shall give way.

Mrs. Ewing

Will the Secretary of State give a statistical analysis of the number of gainers and losers? That point is vital, particularly in rural communities such as my own, where we are dependent upon small businesses to retain local work forces.

Mr. Newton

Each intervention now demonstrates that it would be more sensible if I got on with my speech.

The concession that the Government are proposing, which is contained in the admittedly rather complicated amendments, is estimated to cover 700,000 employers. That is more than half the employers who submit national insurance returns to us. Those 700,000—a very large number of small employers, because the definition that we chose is generous—will have not merely the regular advantages of the national insurance contributions set against an average expectation of having to pay some SSP; they will have the safeguard that, if any employee is sick for more than six weeks, they will go back to 100 per cent. reimbursement. In those cases, there is a strict limit to the amount of extra SSP that they can be expected to pay in respect of any employee. I hope that that will reassure the hon. Lady for Moray (Mrs. Ewing). The measure is specifically designed as a safeguard for the employer who experiences an above-average record of sickness in a member of his work force. I must try to curtail my speech.

We acknowledge that the operation of averages is easier to apply the larger the firm is. It is precisely for that reason that we have brought forward the amendments directed to the position of small firms in the way that I have described. Our efforts have been concentrated on designing a scheme that will help small employers whose experience departs from the average, and that is the basis on which we seek support for the concession that is contained in the amendments.

Different approaches to the problem have been urged on us. Originally, in another place we put forward an amendment in broad terms that would have allowed us scope for different ways of defining who was to count as a small employer for this purpose and different ways of seeking to cope with above-average sickness. However, their Lordships expressed a clear preference for one particular way of doing that, and it is that method of achieving that, rather than the exact details of what was passed in another place, that I am recommending to the House.

As is self-evident, the amendments are complicated. I shall do my best to pick my way through the key provisions and explain them as carefully as I can.

Mr. Robin Maxwell-Hyslop (Tiverton)

Without giving way.

Mr. Newton

I am grateful to be urged in that respect by my hon. Friend, as he has been known to intervene on Secretaries of States' speeches on earlier occasions. I shall take that remark as a self-denying ordinance, for the time being at least.

The first key issue is how we define a small employer. The most obvious way is by the number of employees—five, 10 or 20. However, that method is open to some obvious difficulties. For example, it does not cope with the problem of an employer who has a fluctuating work force, and there are several other difficulties on which I shall not elaborate to the House. We concluded that it would be fairer and simpler to define a small employer by reference to his contribution payments in the preceding tax year. That focuses the definition of his actual wage bill. I am glad to say that, on a matter which has not been free from controversy, that approach to defining a small employer seems to have met with universal agreement.

In practice the method would work as follows. All employers are already required, within 14 days of the end of the tax year, to complete a return to the Inland Revenue giving the total tax and national insurance contributions during that year. So employers should have the information readily available. If the total contributions are within a specified figure, the employer will qualify as a small employer during the whole of the succeeding year. Our original proposal and our amendment set the level at £15,000 of national insurance contributions in a year. That corresponds precisely with what the other place wished.

It will make things clearer to people and enable them to judge the meaning of the definition if I say a word about the scale and size of firms which will come within it. I have already said in response to the hon. Member for Moray that we estimate that some 700,000 employers will potentially be eligible, ranging from an employer with four employees who all are on the upper earnings limit of £350 a week—fairly well paid people—to an admittedly unlikely set-up at the opposite end of the spectrum of 90 employees all on the lower earnings limit of £46 a week. The definition would cover both a large firm of low-paid people and a smaller firm of rather better paid people. It is a much more satisfactory definition than the alternative of counting heads.

To give a few other examples, the definition would cover a firm of 22 employees all earning £100 a week or of 12 employees all earning £150 a week. As I said, we believe that that is a flexible system. I am sure that it is the right way to proceed. There is common agreement on that in both this House and another place.

Another point which we have accepted is contained in our amendments. It is that the concession and safeguard to employers defined on that general basis should be related to the number of weeks for which an individual has been sick. At various stages in another place there was considerable argument about whether it was better to go for a relatively simple and straightforward approach or one that rested on an aggregated amount of SSP paid in a particular period.

The Government originally hoped to consult on which method industry would prefer but, in the event, another place made it clear that it preferred a solution based on the number of weeks. We thought it right to accept that. However, its proposal was rather complicated. It suggested that one tranche of employers should have 100 per cent. reimbursement throughout, another should receive 100 per cent. reimbursement after three weeks and another 100 per cent. reimbursement after six weeks. We believe that it is right to go for a simpler system and that a proposal which secured 100 per cent. reimbursement for employers of any size went rather too far in view of the contribution reductions to which I have referred. Therefore, we tabled amendments which go beyond our original intention, which was a threshold of eight weeks, to the significantly more generous basis of six weeks, which, as I said, will apply to individual employees and will affect about 700,000 employers. We believe that that is about the right level at which to pitch the measure.

To return to my example of an employer with five employees earning £170 a week who had one employee away for six weeks, the employer would have a total extra cost of £164.82 in SSP but his saving in national insurance contributions over his work force as a whole would be £176.80. So he would still be almost £12 to the good. He would begin to go into deficit if the SSP lasted for more than six weeks. That is when the Government propose that the small employers' relief and a return to 100 per cent. reimbursement should apply to prevent him from going into deficit.

I have necessarily spent some little time on the proposals, not only as a result of interventions but because I thought it right to explain the proposals as fully as possible. I shall explain as briefly as possible some of the other points covered by the Government amendments.

Mr. Meacher

Will the Secretary of State give way?

Mr. Newton

It would be more sensible if the hon. Gentleman allowed me to get on. I understand that he will make his own speech afterwards.

Our amendments to subsection (1B) of Lords amendment No. 7 set out the formula for determining whether a small employer is entitled to small employers' relief. There is an algebraic formula, which is not as complicated as it might appear. It ensures that all days of SSP, including odd days, count in the calculation. Another improvement on the Lords amendments is that by relating the provision to periods of incapacity for work, linked spells—spells of SSP not separated by more than eight weeks—can be taken into account in calculating the six weeks. That is a refinement which is not in the Lords amendments. Indeed, it is a further useful safeguard for businesses which experience above-average sickness in an employee.

Subsection (1C) of our amendment (a) to Lords amendment No.7 retains for possible but not certain use in future some of the flexibility which we originally sought to gain. Whether it is appropriate to use it will depend on events. We shall take very much into account early experience of our proposals. We have maintained, at the cost of some additional complexity in drafting our amendments, the scope to adopt a different approach, what I would call an aggregation, rather than an individual employee approach, if that seems the sensible course. Several noble Lords in another place, including my noble Friend Lord Jenkin, attached particular importance to such an approach and we were anxious to retain the flexibility to adopt it if it seemed sensible.

Subsection (1D) contains the power which enables regulations to define a small employer on the basis of contribution payments. The power is sufficiently flexible to allow us to define the prescribed period to which the contribution threshold relates to a period other than the preceding tax year. That makes provision for the new employer who does not have a full year's national insurance record on which he can be judged.

The only other significant point which must be made is that subsection (1E) meets a point pressed on us fairly hard in another place by setting into the primary legislation the scope for reviewing the £15,000 contribution threshold. The subsection requires the Secretary of State to consider each year whether the threshold should be increased in the light of various points referred to in the amendment.

I have said as much as I need to say about the drafting of the amendment, which represents a significant additional safeguard for small businesses which experience above-average sickness. Such employers would be likely —I cannot say certain—to be gainers from the basic structure of our proposals.

Before I conclude, I should make a few remarks about Lords amendment No. 5.

Mr. Richard Holt (Langbaurgh)

How much will the proposals for large employers such as Cleveland county council affect the community charge? Any extra cost will have to be passed on by large employers but employers such as councils do not have customers to whom they can go, only community charge payers.

Mr. Newton

I have necessarily used illustrative examples. Clearly it is not possible for me to work out, certainly not on my feet, the precise affect on Cleveland county council or any other employer, without any knowledge of the mix of its employees and the wages paid to them. However, such employers will benefit from the reduction in national insurance contributions, which applies at every level of earnings and to employers of all sizes.

5.30 pm

Lords Amendment No. 5 removes from the Bill scope for making further changes in the reimbursement rate by means of secondary rather than primary legislation. Without by any means accepting everything that was said on that matter in another place—perhaps it has been overlooked that there is power under secondary legislation to raise employers' national insurance contributions by no less than about £1 billion—I readily accept that it was a point of concern to the business community which, despite what I said on Second Reading, continued to express fears lest there was some settled plan for going further than what was contained in the Bill.

I am happy to advise the House in that respect to agree with the Lords in the amendment so that were any change to be contemplated at any future stage it would be necessary to bring primary legislation before the House, rather than to act on the basis of secondary legislation.

I appreciate that I have delayed the House for some time, I hope for reasons which the House will understand. In everything that I have said is implied the view, which I hold strongly, that what we have proposed strikes a fair and reasonable balance—a new and slightly adjusted balance—in the provision for short-term sickness in circumstances where the small shift that it proposes makes an important contribution to progress on other social security objectives which are widely supported.

My view that that is a fair and reasonable balance, in the context of social security spending as a whole, is greatly strengthened by the additional safeguard that we have built in for small businesses, responding to representations made by many of my hon. Friends and others, and I seek the support of the House for those changes, modified as they have been, as a whole.

Mr. Deputy Speaker (Mr. Harold Walker)

I must advise the House that the amendment and Lords amendments Nos. 2 to 7 involve privilege.

Mr. Meacher

It is an unhappy day for parliamentary democracy when the Government impose a heavy 'Whip, as we are led to believe, to try to marshal their full majority over amendments made in another place which merely soften, but do not in any way strike out, what must be one of the most unpopular Bills in modern times. But I am encouraged by the number of Conservative Members present for the debate, which I hope will be a genuine and open debate on the issues involved.

It is not unfair to say that the Bill does not have a friend anywhere, except the Treasury and the occupants of the Government Front Bench. It is comprehensively repudiated by the CBI, the National Federation of Self Employed and Small Businesses, the Engineering Employers Federation, the Building Employers Federation and by any and every small business and organisation one cares to name, as well as by the TUC, the trade unions and the voluntary sector.

Indeed, the business community and all major business representative groups are united—I cannot recall when this has previously been the case—in still demanding that the Government withdraw the whole Bill, even after the damage limitation achieved in another place.

Mr. Holt

Is the hon. Gentleman also aware that the Institute of Personnel Management is opposed to this legislation, being the practitioners who would have to put it into practice?

Mr. Meacher

I am glad to accept the point that the hon. Gentleman makes, which I hope was heard by the Minister. It adds to my point that the right hon. Gentleman would find it impossible to find any reputable body outside which favours the Bill. I cannot recall a time when I was able to say that to the Government.

Mr. Patrick Nicholls (Teignbridge)

Will the hon. Gentleman give way on that point?

Mr. Meacher

No, because it is a side issue and I am anxious to make progress with my speech.

The Minister's palpable embarrassment at defending the indefensible was exposed in his Third Reading speech, which must have been the shortest I have witnessed in 20 years in Parliament. It occupied a mere five lines in Hansard, the right hon. Gentleman simply saying that he might decide to say something later, which in the event he did not. In view of that obvious and manifest embarrassment, I hope that the right hon. Gentleman does not come to our proceedings today with a closed mind and that he will not treat Parliament with the contempt that a heavy Whip might suggest, for we are faced with serious issues that must be debated seriously.

The central issue today is whether the Lords amendment to make the whole new Government package completely cost neutral should be allowed to stand. The original Bill was, as the Minister said, intended to cut the reimbursement of SSP from 100 to 80 per cent. It also removed the 7 per cent. additional handling charge which employers could claim for administrative cost.

That would have cost employers about £250 million in 1991–92. That was roughly balanced—it was fair for the Secretary of State to make the point—by reductions in employers' national insurance contribution rates which would have saved them about £250 million a year. But those changes were heavily slanted in favour of employers paying below average wages, and they are not necessarily small employers.

But the Government have offered no compensation to employers for the increased cost that they will have to bear as a result of the changes in SSP rates announced in the right hon. Gentleman's annual benefit uprating statement. Because of the rise in the earnings threshold, from £125 to £185, which determines entitlement to the higher rate of SSP, about three million workers will lose eligibility, of whom about 600,000 who might be expected to claim this year will lose about £9 a week.

In many cases, employers would have to make up the shortfall and their costs would rise by as much as £100 million, according to the Government's figures. It was that shortfall which the Lords amendment was designed to rectify. It would increase the employers' reimbursement rate to 91 per cent. That percentage is fine tuned to increase the amount reimbursed to employers by £99 million, which is virtually exactly the loss to employers from the change in the SSP threshold. So the overall effect of the amendment is cost neutral in the Government's calculations.

Three central questions are at issue today; first, why are the Government resisting the amendment and going to such lengths to overturn it; secondly, why are they so determined, in the face of a triple rejection in another place and when the business community is screaming for the withdrawal of the Bill, to push ahead with a measure that is cost neutral in its basic structure; and, thirdly, why are they being so excessively mean and niggardly, as I shall show, towards small employers and going out of their way to deny them the smallest relief already agreed in another place?

The answers to those questions will reveal much about the Government's intentions. Why are they refusing to accept an overall cost neutral package? The answer seems clear. Indeed, the right hon. Gentleman virtually said as much today. He is having to make cuts in the package to recompense the Treasury for the minor concessions that he has already obtained from the Treasury on tick, in particular for the increase in child benefit.

So the first reason to oppose the Government today is that that part of the Secretary of State's argument is wholly objectionable. It is not right to try to justify cuts in provision for one vulnerable group on the ground that more is being spent on another. A separate point is that the argument is also tantamount to the state advocating its well-established responsibility to protect the welfare of employees during periods of sickness.

Mr. Nicholls

The hon. Gentleman loves to present himself to the House as the scourge of the employing classes. Why is he not prepared to accept the proposition that employers have a responsibility to their employees when they are sick? There is nothing wrong with requiring them to make a modest contribution to the care of sick employees. The hon. Gentleman does not answer that question because the point he makes is completely bogus.

Mr. Meacher

I am happy to answer the hon. Gentleman's question. I agree that employers have a responsibility towards their employees when they are sick. The problem is that the survey from which the Government like to quote on the highly spurious 91 per cent. figure shows that only 44 per cent. of private sector employers provide occupational sick pay for their employees. For small firms, the figure is only about half that. That is why the state still has a clear responsibility, and it is foolish of the hon. Gentleman not to recognise that.

It is not as though the extra £1 for the first child is much of an increase after a four-year freeze. The Secretary of State tried to outline the great improvements that the Government are making and said that, of course, employers must bear some of the cost. However, an increase of £1 a week for only the first child after a four-year freeze, when the shortfall is £2.30 a week, does not amount to much. The Secretary of State needed to make some improvement as a figleaf before the forthcoming election, but the Treasury would not fund it and forced the right hon. Gentleman to find the money by making cuts elsewhere. That is why the Government are so adamant that they will not accept the 91 per cent. overall cost-neutral compromise and insist on returning to their original 80 per cent.

I think it was the hon. Member for Devon, North (Mr. Speller), who is otherwise engaged at the moment, who hit the nail on the head: how can the Government justify asking small employers to subsidise child benefit? That was an accurate observation. The Treasury's fingerprints are all over the Bill, but nowhere more clearly than in overturning the 91 per cent. proposal made by Lord Mottistone, a Tory peer in another place.

Why are the Government so determined to press ahead with the main structure of the Bill when there is no net gain to the Exchequer—any savings on the Consolidated Fund are cancelled out by reduced income from national insurance contributions—and when all the business organisations demand that, in the light of the defeats inflicted in another place, the Bill should be withdrawn to allow for the consultations that should have taken place when the Bill was first drafted?

Mr. Newton

I shall try not to intervene too much, but there are echoes in the hon. Gentleman's speech of an earlier exchange that we had. Will the hon. Gentleman give an undertaking that, when he has to put up employers' national insurance contributions to fund his expensive promises, he will yield to the blandishments of employers should they protest about what he is doing and try to stop it?

Mr. Meacher

We have no intention of increasing employers' national insurance rate contributions, so the problem does not arise. As the Secretary of State is so extremely keen to press the point, we have said that we believe that there should be improvements for the pensioners, who have had such a lousy past decade, and in child benefit, which would be financed by removing the upper threshold of national insurance contributions, so that the rich, who have had such a bumper decade, would contribute a bit to help those at the bottom of the pile.

Before I was led aside by that intervention, I was about to give a telling quote from a document from the Association of British Chambers of Commerce, the Association of Independent Businesses, the Confederation of British Industry, the Forum of Private Business, the National Federation of Self Employed and Small Businesses, the Institute of Directors, the National Chamber of Trade, the National Farmers Union and the Union of Independent Companies. Apparently, the Institute of Personnel Management is not represented, but it was probably not told about it and would have wanted to put its name to it. The document states: We are unanimously agreed that, despite the important amendments incorporated during the House of Lords debates, the best course would be for the Government to withdraw the Bill and maintain existing arrangements for the present … That would allow full discussion before any major changes in this area are introduced.

It could not be any clearer than that, so why is the Secretary of State digging in his heels? The answer is clear. The real purpose behind the wretched little Bill is gradually to transfer the whole of the cost of paying SSP to the employer. In effect, it will privatise the payment of sickness benefit. By transferring 20 per cent. of the cost, the Government save, on their own figures, £250 million and by transferring the rest the Government have their eyes on a further £1 billion. That is the real aim, which is why the Government are determined to stuff the Bill down the employers' throats come what may.

5.45 pm

However, that is not the end of the story. I shall return to the perceptive intervention of the hon. Member for Brentwood and Ongar (Sir. R. McCrindle): the transfer of statutory sick pay could well set a precedent for statutory maternity pay, giving a further saving of £270 million, and for industrial injury compensation, when the savings might be more than £500 million. Let no one be unaware of the fact that we are setting that precedent today. The bottom line is that the Bill will dismantle the welfare state. That is why we, and I suspect the great majority of people in this country, strongly object to it. The Bill also involves shifting huge costs of up to, over future years, as much as £2 billion on to employers. That is why they object to it so strongly.

It would have made it much easier for the Government if they could have overturned the Lords amendment that requires that any further changes in the percentage of reimbursement should be through primary, not secondary, legislation. That is not what the Government wanted or intended. In the original Bill, the Government proposed that any change would require only a negative resolution of the House, not even an affirmative resolution. They wanted changes to be carried out quietly behind closed doors, if possible without embarrassing discussion in the open. However, in accepting the amendment adopting the primary legislation requirement, moved and passed in another place—I welcome the fact that the Secretary of State did so—the Government display no real change of heart. If they had overturned the amendment, the nakedness of their purpose—gradually reducing the percentage reimbursement towards zero—would have been too transparent, and so they did not.

The Government, quite remarkably, refused to accept even the small concession on behalf of small employers that was moved and passed in another place. That was extraordinary, given the litany of damning screams from the Government's corporate supporters. I am sure that other hon. Members will have heard some of the complaints. The Confederation of British Industry said: No one wants the Bill, but fear of its impact is widespread. The Government's tabled response does not meet the case. The best course would be withdrawal of the Bill. The Forum of Private Business said: The timing of the SSP Bill could hardly be worse for the small business community because of the current recession. The Government clearly does not understand small businesses —or does not care. —[Interruption.] I am simply quoting the words of the Forum of Private Business. It goes on: The Bill was rushed through the House of Commons at breakneck speed allowing insufficient time for small business groups to put forward positive solutions. As members of the DSS Employers Panel and the Contributions Unit, Specialist Group, the Forum of Private Business is aggrieved that it was not consulted. The proposals in the SSP bill fly in the face of the aims of the Deregulation Unit, a Government body which seeks to simplify rules and regulations affecting small firms.

The National Federation of Self Employed and Small Businesses says: The provisions will add substantially to the costs of some businesses, amongst them many small businesses, and do so at the worst possible time, when they are coping with a deep recession.

The Association of British Chambers of Commerce says: This is one further burden which could push many struggling businesses into closure, supposedly in a period of deregulation when the private sector is expected to play a more prominent role.

The West Yorkshire Council of the National Chamber of Trade says: It would place intolerable burden upon employer's at a time of high interest rates, the impact of the uniform business rate and escalating high street rents. This would be a deathblow to many local small businesses and a sharp reduction in employment, also discouraging the employment of disabled and those suffering repetitive sickness. None of those organisations is known as having crypto-leftist sympathies. But, despite all that, the right hon. Gentleman is still not prepared to accept the modest concessions for small employers agreed in another place.

It is important to be clear just how niggardly the Government are being. When the Bill was first before the House the Government offered no concessions to small employers; but when the business organisations, beginning to alert their members, had had enough time to stir up some palaver in another place—I am glad that they did —the Government jumped in with a concession which they hoped would quieten their Lordships. It did not.

The Government proposed a small employers' exemption after eight weeks of sickness where the annual aggregate of national insurance contributions in 1991 was less than £15,000, as the right hon. Gentleman stated. It was too little too late, and it was rejected out of hand—not surprisingly, since the number of sickness spells that exceed eight weeks is extremely small. The right hon. Gentleman did not tell us the exact number. I am not even sure that he knows, but it is certainly extremely small.

In other words, the Government were trying to buy off the Opposition with a concession which, on the best evidence given to me, was worth a paltry £1 million to £2 million. It was rejected, as it deserved to be, and instead the triple concession was passed—exemption after six weeks' sickness where contributions are under £15,000, after three weeks where contributions are under £10,000 and exemption immediately where contributions are under £5,000. It is important to realise how extremely modest that exemption package is.

National insurance contributions of less than £15,000 imply—the right hon. Gentleman had the grace to admit this—a firm with only five employees where those employees are on national average earnings. The cost of the concession, according to my best estimates, would be only about £15 million. That would still leave an overall gain from the Bill of £85 million to the Exchequer. Despite the fact that that would clearly focus help at the point where the need was greatest for small employers, would obviate administrative complexities, for which the Government are always arguing in small businesses, the Government are trying to overturn it.

In drafting prose in Government amendment (a)—algebra or otherwise, I found it some of the most impenetrable that I have ever had to wade through—the Government are now seeking to knock out the two lower thresholds: exemption after three weeks where contributions are under £10,000, and immediate exemption where contributions are under £5,000. I make it clear that in the latter case the companies that will lose the concession already granted in another place if it is overturned tonight will be overwhelmingly those employing one or two persons only—unquestionably those who have the greatest need; the companies that surely cry out for full exemption.

The sole concession that the right hon. Gentleman is now prepared to contemplate is confined to cases where sickness exceeds six weeks, which is not quite as few as where it exceeds eight weeks but it is still unusual, and where the total cost to the Exchequer is, I believe, a miserly £5 million. That is what the right hon. Gentleman is presenting to the House as a generous concession which he hopes the House will back.

I hope that Conservative Members who, perhaps justly, like to see themselves as the champions of business, particularly small business, will ask themselves tonight whether that is the action of a Government devoted to enterprise or the action of a Government who are cheese-paring and over-concerned with public expenditure cuts in the face of all common sense and reasonableness.

The effect of the Government's obstinacy will be felt most in small companies, but it will be spread across the whole of industry. The Building Employers Confederation, which embraces, as the House will know, many large and small firms, said: The industry has an average manual wage of £260 per week. I make no apology for giving the figures because the right hon. Gentleman gave many figures. It goes on: For an employee on average wages of £260 per week the reduction in employers' National Insurance Contributions will be £6.24 for the year for one employee. It can be seen from this figure that only if such a worker qualifies for Statutory Sick Pay for less than three days a year will his employer be 'a winner' or break even under the legislation. In an industry where much of the work is done in all weathers and is very physically demanding this level of sick leave is unlikely to be met in any company, large or small. The industry contains a large sector of firms employing less than twenty men, where at break even levels such as illustrated, the prolonged sickness of only one or two individuals could result in a heavy deficit under the scheme.

In the light of that and so many other representations that I and I am sure many other hon. Members have received, it is difficult to see how Conservative Members can support the Government tonight when the voice from industry and commerce is unanimously condemnatory.

Many have been put off the Bill by its assumed technicality and by the speed with which the Government pushed it through the House in order to avoid debate. But now that it has returned to the House, the issues are plain. They are not technical; they are political. They concern the state's responsibilities to employees who are sick, the right of employers not to be saddled, at extreme cost, with obligations that are not their function, and the need for the smallest businesses to be properly protected from unnecessary administrative burdens.

For those reasons, I call on hon. Members on both sides of the House, if the Government will not withdraw the Bill as they should, at least to preserve and build on the important amendments moved and passed in another place.

Mr. Nicholls

I declare at the outset my interests in the Federation of Associations of Specialists and Subcontractors and in the Hill and Smith Group.

One of the curiosities about speaking in the House is that after a period of time the coinage of hyperbole becomes completely devalued. I make that point because during the past seven years it has been my unhappy lot to hear numerous speeches made by the hon. Member for Oldham, West (Mr. Meacher). I have listened to him from the Back Benches and I have debated with him from the Front Bench and on every occasion when I have debated with him for any length of time he has shown a complete hatred—I use the word deliberately—of what he regards as the employer classes. He has never had a good word to say about them. The hon. Gentleman's view of the relationship between employees and employers—

6 pm

Mr. John Battle (Leeds, West)

I suppose that the hon. Gentleman will claim that we have a classless society.

Mr. Nicholls

—is primitive, even by the standards of those who are heckling on the hon. Gentleman's behalf. For years, we have listened to a torrent of bilious abuse about the employing classes from the hon. Member for Oldham, West. Suddenly, the piranha has turned vegetarian, and we witness the unique spectacle of the hon. Gentleman becoming the bosses' nark—when he should be attempting to make some proper criticism of the Bill.

Did the hon. Gentleman make any real contribution or give the House the benefit of his intellectual thought? Mercifully not, but he retrieved from his wastepaper basket all the letters from employers' organisations that he should have read over the years, and quoted them to the House. The hon. Gentleman has undergone a transformation. He has joined the forces of light from the forces of darkness, and we are presented with the true champion of the employer classes. We see in the hon. Member for Oldham, West the man who claims to be the real representative of the employer classes and the one who will safeguard their interests. Who is the friend of the employers? It is the hon. Member for Oldham, West. Seldom have we been treated to a more ludicrous spectacle than seeing employers' rights championed in that way.

I will treat the hon. Gentleman's contribution with greater kindness and consideration than it deserves, and ask why it is that employers' organisations have expressed their opposition to the Bill. I have a number of advantages over the hon. Member for Oldham, West. I have actual knowledge of the subject. Unlike the hon. Gentleman, I run a small business and employ people, and must face the prospect and pressure of making a living at a time when there is a recession. As an employer myself, I do not take kindly to the proposition that I should pay out any more money, in any circumstances. My driving ethos is to gather in money, rather than to spend it. It is hardly surprising that employers' organisations should have written to their Members of Parliament, saying, "Here is a measure that will require us to pay more. We are not in favour of it." One could hardly expect them to be otherwise.

In a curious way, the Bill does nothing more than formalise the practice that many employers already follow. If the claim that there is no real connection between an employer and his employees—that the employee is just a tool to be used, and that if he falls sick he should be made a burden on the state—was ever true, it is certainly not true today. It is ridiculous to argue that an employer has no interest in a valued employee once he falls sick. In this day and age, it is equally ridiculous to expect the state to do everything, and that responsibility should be taken from others.

An editorial in The Times today makes the same point. Given the voluminous quotations used by the hon. Member for Oldham, West, it is surprising that he did not refer to that article as well. It states that the Government's arguments are powerful: Statutory sick pay is fast becoming an anachronism. Nine out of ten employees are now covered by company schemes, most of them more generous than the state's. That is to be encouraged. And for the state to bear the whole cost of sickness creates the wrong incentive … With 30 times more days lost through sickness than through strikes, sickness management is vital to industrial efficiency. Managers should pay at least part of the cost from their pockets. That point was also made by my hon. Friend the Member for Devon, North (Mr. Speller).

Mr. Battle

Will the hon. Gentleman check the figure given in The Times? Is it not incorrect? Nine out of ten employees are not covered by company schemes, as that article suggests. If the hon. Gentleman will refer to the Library or to the Secretary of State, he will be informed of the true figure.

Mr. Nicholls

The hon. Gentleman's point is not only bogus but boring.

Mr. Battle

Why does not the hon. Gentleman try to make an argument instead of hurling abuse?

Mr. Nicholls

I admit that my experience of socialists is that, having asked a question, they do not require an answer. However, the conventions of the House are such that, whether the hon. Gentleman likes it or not, he will get an answer.

I do not intend to turn this into a Second Reading debate, repeat all the figures that were given then, and illustrate the various ways in which they can be presented. One must inevitably do the best that one can with the figures available. If that is the best intervention that the hon. Gentleman can make in response to the arguments made today and in The Times editorial, it does not say much for the quality of his arguments.

The Bill does nothing more than acknowledge common existing practice. Employers already take an interest in employees who fall sick arid maintain contact with them. However, I concede that business organisations feared that the Government had got it wrong, especially in respect of small businesses.

On Second Reading, my right hon. Friend the Secretary of State pointed out that the measure will produce gains for some. Perhaps organisations that did not understand the Bill's detailed provisions at the time of its Second Reading last November will now be reassured. If one concern deserved to be ventilated in another place, it was the effect that the Bill might—and I emphasise the word "might"—have on small businesses. My right hon. Friend has now said that, even if the Government do not concede the arguments presented in the Lords, they concede the extent of the concern that has been expressed. I may say in passing that a more improbable body to claim to be representative of small businesses than the House of Lords would be hard to find—other than the parliamentary Labour party.

In the overall context of social security spending of £63 billion a year, the Bill is a justifiable measure. One can understand the concerns expressed by small businesses, but my right hon. Friend the Secretary of State has gone a long way to allay them.

Mr. Merlyn Rees (Morley and Leeds, South)

The hon. Member for Teignbridge (Mr. Nicholls) always tries to be nasty—[HON. MEMBERS: "And he succeeds.]—which should further his career. I intervene briefly because I have been asked by a representative of small firms in my constituency to raise certain issues in the debate. I have a question for the Secretary of State, who always knows the details of his legislation. I presume that the purpose of the original Bill was to save money, either for the Department or the Treasury. If so, what savings remain to be achieved after the changes" thatthe right hon. Gentleman announced? There must be some.

I declare an interest as the chairman of a small firm, from which I have never made any money and never will. I take nothing from it. It receives no grants from any source and nothing extra from the bank. It stands on its own feet. That is also at the back of my mind.

The Secretary of State referred to the growth in occupational pensions and said that it has not been so pronounced in manual occupations. I point out to the right hon. Gentleman that absenteeism is not so high in small firms as it is in larger companies. Therefore, his argument that absenteeism should be taken into account does not apply nearly so much to small firms.

I was glad that the hon. Member for AldridgeBrownhills (Mr. Shepherd) warned the Secretary of State about the danger of using averages, which can affect the perspective. When the Secretary of State called them in aid, he failed to take into account the problems of very small firms.

I promised to raise in the House a matter which was brought to my attention by the branch secretary of the British Decorators Association, Heavy Woollen and Spen Valley branch, Mr. Peter Hanley, who lives in Morley in my constituency. It also worries me because I know that small firms have problems at the moment. Goodness knows, problems are affecting small and large firms in the building industry, including the small firm of which I am chairman. One problem is that people do not pay their bills and a shortage of income, of whatever degree, causes problems.

Mr. Hanley brought to my notice the fact that the association is alarmed at the likely effect on small business employers"— of the Bill. He said that what the Government are doing is a potential death blow to small businesses—particularly in labour intensive … industries". The Government, and not merely the Department of Social Security, should take that into account. When small firms are in trouble they cannot find the smallest amount of money. There is nobody to whom they can turn and banks are not nearly as helpful as they were.

The member firms of the British Decorators Association are small and Mr. Hanley told me that they are already reeling under the impact of the rating system plus revaluation, high interest rates and high street rents which are escalating alarmingly in most areas of our constituency. Will those small firms be worse off as a result of the changes made, taking into account the concessions—if that is the correct description—that the Secretary of State made tonight? Small firms have enough problems without having to face these additional ones.

I have to congratulate the Government. They are hurting large numbers of people with the poll tax—people who would normally vote for them. That is marvellous. Their policy is so right that they continue to hurt the very people who put a cross on a piece of paper. Small employers do not vote Labour in very large numbers and they, too, will be hurt. They are worried, and I hope that the Government will take their worries into account.

The Government are still saving money because of the Bill. If there were no savings they would not have introduced it. The amendments and the new clause do not go far enough. They will save money, but some firms will be worse off and that will be the straw which breaks the camel's back.

By my stage in life I understand taxation, and I agree with my Front-Bench spokesman that taxation has increased in the past 10 years, despite the fact that income tax has come down. I believe that the likes of me should pay 50 per cent., not 40 per cent., in income tax, and that it is right to go to the electorate and say that there should be higher taxation. I believe that because part of the constituency that I represent is a deprived area and every weekend I realise that it is nonsense for people to say, "Let us cut taxes". More money needs to be spent in some areas, but it needs to be spent wisely.

The Bill will hurt small businesses rather than large numbers of people as the poll tax does. I believe in small businesses and that is why I want to help the firms in my constituency. It will not make a toss of difference at the next election in my constituency, so I am not arguing against the changes for that reason. Small businesses are in trouble and the Government are forgetting it.

Mr. Speller

Our problem is one of trust and perception. I entirely accept everything that my right hon. Friend the Secretary of State said. He has our trust because we have always perceived him to be a good and honourable man. However, the outcry over the relatively small changes in the Bill has also changed perceptions of Government integrity and the Treasury's integrity in influencing the Government. This is not a minor matter. The integrity of business depends upon trust.

Employers have to pay national insurance—there is no argument about that—but have always expected that they would get 100 per cent. reimbursement, having paid the premium. When one takes out an insurance policy, it is understandable, if one pays a lower premium, to have to pay the first 20 per cent. of the claim.

One of my hon Friends pointed out that before employers had to pay national insurance contributions they could insure privately and get wonderful cover for their staff. However, the essence of the matter is that compulsion is involved and that the House is doing the compelling, not the other place, where they made significant changes to the Bill.

At the moment, I am minded to vote against the Government simply because of the question of integrity. My right hon. Friend the Secretary of State always makes the best case that he can, no matter how bad the hand that he is playing. The measure will not bankrupt Marks and Spencer and Cleveland council, which have both been mentioned, but for the farmers and small employers in my constituency it might be yet another of those last straws which do not quite break the camel's back but are making the camel a little bowed.

The Secretary of State tells us—I know that he means and believes it—that there is some sort of average. One can always add figures together, divide them by a number of years and get a figure, but there is no average. In some years the shops in which I have an interest are destroyed for a fortnight because all the employees and the management have influenza. In other years it will be because of a three-day cold or lurgie, but there is no such thing as an average in a small business because they do not employ enough people to make an average. We all know which employees work hard and which do not. If employees can take 21 days' sick leave without loss of pay, we all know which employees will take them because they think that it is their entitlement.

6.15 pm

As an employer I would expect to pay my premium for statutory sick pay and to get my reward if I had to call upon it. I do not hope to cash it in, to be sick, or for any of my staff to be sick, but employers are paying 100 per cent. for a 100 per cent. return.

This is not the time to impose even the smallest burden. I know that the figures are pretty good—0.04 per cent., which is negligible. However, it is not negligible if one has 10 staff to worry about.

When my right hon. Friend sums up, will he take a hard look at these so-called averages and bear in mind the fact that, although people throughout the country do not enjoy our various forms of taxation, they think that this form of taxation is especially mean. It is imposed upon those who cannot answer back. One cannot cancel the policy and find another insurance company. One is stuck with it and people like me do not like it.

Mr. Wallace

Many hon. Members respect the hon. Member for Devon, North (Mr. Speller), who made some very pertinent comments and said that his vote will be following his voice. As he said, we cannot average figures out throughout the country and somehow find an equilibrium for the Secretary of State's proposals.

When listening to the Secretary of State earlier this evening hon. Members had the right to be somewhat perplexed about what exactly he was telling the House. He certainly presented the proposals as a package with, on the one hand, national insurance contribution reductions and, on the other, an added imposition upon employers, and he suggested that they would balance each other out. However, he also said that there would be a net bonus of £100 million which would be used to help poorer pensioners and for community care—no hon. Member would quibble with that. Yet if £100 million is to be released as a result of this package, clearly there will be some losers. The pertinent question is, if small businesses are to be the losers, should they bear that burden? No one argues with the worthiness of the cause, but should small businesses have to pay for it?

My party supports Lords amendment No. 3, although we regret the proposed reduction from the present 100 per cent. to 91 per cent. We oppose any reduction.

The hon. Member for Teignbridge (Mr. Nicholls) mentioned the leader in The Times today. On Second Reading, the hon. Member for Oldham, West (Mr. Meacher) did a fairly effective demolition job on the notion that nine out of 10 employees were covered by company sickness schemes. According to The Times, for the state to bear the whole cost of sickness creates the wrong incentives. Conservative Members frequently assert that it is not the state's money, but the taxpayer's. We are talking about national insurance contributions made by both employers and employees, and we wanted a rebate.

Back in the early 1980s, the Select Committee on Social Services considered the original proposals. I referred to its findings on Second Reading. Its report states: Whilst the reduction in national insurance liability will be approximately proportional to payroll costs, the liability to pay ESSP will be far less evenly spread. Industries, occupations or regions with higher than average rates of sickness will have relatively greater costs under ESSP. Despite that timely warning some nine or 10 years ago, the Government have presented a scheme that they roundly rejected then and have fallen into the same old trap of trying to pretend that there is a possibility of a trade-off between changes in national insurance contributions and sick pay provisions.

Ms. Short

The Bill was introduced with such speed that the social security advisory committee was unable to report at the time. Is not that another part of the whole dishonourable process?

Mr. Wallace

The problem was not only the speed with which the Bill was introduced, but the speed with which further stages were taken, with Second Reading on a Monday and remaining stages on the Wednesday. That hardly allowed us time to breathe, let alone adopt a considered approach. The other place had time to engage in useful deliberation and consultation and thus was able to consider the Bill much more effectively.

I believe that the Bill will have an uneven impact, affecting small businesses disproportionately—notwithstanding the concessions that have been made. The National Federation of Self Employed and Small Businesses Ltd. has made some calculations, taking into account both the 80 per cent. rebate provision in the Bill and the changes in employers' national insurance contributions. In 1990–91, if an employee earned £100 a week and his employer paid £7.03 national insurance, with a 100 per cent. SSP rebate—which would amount to £39.25—the 7 per cent. national insurance rebate would amount to £2.75, resulting in the employer's paying a total of £65.03. Following the enactment of the Bill, the employer would pay a total of £71.80—£6.77 per week more per employee, in a small business. That may seem a small amount, but the hon. Member for Devon, North referred to the "last straw". For a company facing a deepening recession, even that sum can mount up when multiplied by a number of weeks and a number of employees.

In the case of an employee earning £125 per week, the added subsidy from employers is estimated at £18.34 per week, while in the case of an employee earning £150 per week the added subsidy amounts to £20.74 per week. When the employee is earning £184.50 per week, the added subsidy is estimated to be £.17.97. Those are fairly sizeable sums, which put the "package" referred to so frequently by the Secretary of State into context.

Although we support the amendment, given a 91 per cent. rebate, the balance between what is gained and what is lost is neutral. That is very much the second-best option, the best being no diminution at all.

We are glad to learn that the Government accept Lords amendment No. 5, moved by Lord Russell—in fairly vigorous terms, I understand, with copious references to Henry VIII. His was a very good speech, and I am glad that its persuasive power had its effect on the Government. If they try in future to change the rate and provide for a higher rebate, they must come back to Parliament with primary legislation. That is an important principle, irrespective of the subject matter: many hon. Members on both sides of the House believe that far too much secondary legislation goes through both Houses of Parliament, especially by means of negative resolution.

Further contentious matter is contained in Lords amendment No. 7 and the Government amendment to it. Admittedly, the Government have made an attempt to find some relief for small businesses, but we do not believe that it goes nearly far enough. In Committee, my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) proposed an amendment that he intended to have a similar effect, limiting the impact of the provisions and bringing relief to companies employing fewer than 20 workers. The Government rejected that amendment, but wiser counsels prevailed in another place.

We support the amendment moved successfully in another place by Lord Stanley. According to the figures that I have been given, a total national insurance contribution of less than £15,000 could cover companies employing up to 20 workers, with a taper giving cover of £10,000 for a company employing between five and 10 people and £5,000 for a company employing one or two. The estimates that I have been given differ somewhat from those cited by the hon. Member for Oldham, West; it is the difference between £6 million and £15 million. Either way, it is a small amount compared with the Government's total budget and what they seek to achieve in the Bill.

I ask the Secretary of State to consider the merits of the taper that would allow the smallest businesses—those employing only one or two people—exemption in the event of sickness. I do not think that the right hon. Gentleman needs much imagination to understand what it means to such a business to have 50 per cent., or even 100 per cent., of its work force off sick. I am not talking only about the cost with which this provision will land such businesses; I am talking about the cost to the enterprise as a whole of lacking a key employee at a certain time. The taper is designed not just to provide financial relief, but to take account of the set-up in many small businesses where the value of individual employees is even greater than it is in firms employing 100 or 500 people, in which a single absence could probably be covered.

We are sorry that the Government seek to lose the taper. They propose a £15,000 threshold and a period of six weeks. As I said earlier, that period appears to bear no relation to principle; it is twice as long as the average sickness period. Although the Secretary of State suggested that 700,000 businesses would come into that category, it is clear that many fewer stand to benefit.

I echo the view that the best option would be the withdrawal of the Bill. It is a penny-pinching, mean-minded measure that will affect small businesses especially badly at a time of recession and will affect those forming businesses when they, too, face exceptional difficulties. It is, as we said, the last straw for many businesses. It does little to save the Treasury money; it leads to little saving in manpower. Rather, it transfers to the private sector a state function which I believe many hon. Members feel should lie with the state.

We shall support the amendments that were made in the other House, but only as second best to the Government's withdrawing this Bill altogether.

6.30 pm

Mr. Richard Shepherd

I rise to comment, for the purposes of the debate, on Lords amendment No. 3, to praise my right hon. Friend and, I hope, in passing to damn this Bill. I want to praise my right hon. Friend because I would not want him to misunderstand. He can surely tell that there is great affection for him and trust in what he has been doing over a number of years in social security. That is not affected in any way by what I am about to say.

It seemed to me that the burden of my right hon. Friend's case was that he had provided a number of gains of one kind, that these had merit, but that there was a cost in securing those gains and it was not unreasonable to ask businesses to contribute to that cost. I understand the argument perfectly, and I believe that we are in deeper waters than my simple translation of the position might imply, because there is a point here that goes to the heart of the matter.

I understood that the statutory sick pay scheme was brought about because, the Government said, it was effectively a no cost scheme for businesses. Indeed, that point was emphasised when they made an additional grant of 7 per cent. in a sense for administering the scheme. However, as my right hon. Friend pointed out, times change, and this is what really concerns me. He is looking at a social security budget and within that he is trying to see perhaps a gain here and a recapturing of expenditure there. This measure goes to the heart of small businesses and, indeed, of every business in the country. I wonder what the Department of Trade and Industry has to say on this, or indeed the Department of Employment.

I take the point made by my hon. Friend the Member for Devon, North (Mr. Speller). It is true that in life the success of great enterprises is often a question of sentiment. With people behind one, one can achieve miracles. When one does not have people behind one, that withdrawal of sentiment and faith in institutions, Governments or parties makes it much more difficult to get things to work.

Let me put the argument from the point of view of business. I have watched with regret the rise of inflation. I say no more than that. It has imposed great difficulties on businesses. There have been rapid increases in rent, reflecting an increase in money supply. We have seen the corrective action that has had to be taken, an increase in interest rates. We have seen entry into the exchange rate mechanism, which means that we now predicate our interest rate policy on exchange rates. All these have a direct bearing on both small and large businesses. And at the end of the day, through this measure, we are putting an additional burden on businesses. We are changing the sentiment.

As my right hon. Friend has acknowledged, and as was shown in the debate in another place, we do not know how this falls. We do not know the incidence of those covered by company sick pay schemes. I think that the rubric is that 90 per cent. of companies have some form of sick pay scheme. I should have liked my hon. Friend the Member for Teignbridge (Mr. Nicholls) to have taken on board that point because it was he who, in part, stirred me to speak in this debate. I am very glad to note that he obviously affords all the benefits that The Times urges all companies to provide.

But life is a transitional matter and we try to achieve what we can as and when we can. The burden of my concern is that we are placing an additional disadvantage on companies. It is not very easy to quantify and in some instances it is probably very small. I accept my right hon. Friend's statement that there might be instances of very small companies benefiting from his amendment. But for some it is a burden of considerable size, and this is where I am very sceptical about Government statistics. They say that £250 million represents only .075 per cent. of £300 billion. What has that got to do with the price of fish? That is what we used to say in business. It has very little to do with the price of fish. It is a burden that is borne by the businesses.

I cannot blame my right hon. Friend for this imposition. I feel that it is a misjudgment of Government. I think, therefore, that our noble Friends and all those who often support our party instinctively—small business men like myself—would be grateful if the Government took the opportunity to reflect and to withdraw what is an abysmal little measure.

Mr. Battle

On 26 November, when the House debated the principle of the Bill on Second Reading, we were told by the Secretary of State that the proposals in the Bill would be widely welcomed. I think it was the hon. Member for Bolton, North-East (Mr. Thurnham) who said that employers wanted to accept more responsibility for their lives. What we have learnt today in the debate, as well as in the country at large, and in the debate in the other place, is that that is manifestly not the case.

Markers were put down on Second Reading and in Committee, on 28 November, when the House discussed the Bill, and there were votes on the issue then. It is worth bearing in mind that the Government tried to squeeze this Bill through the House at what we might call the interregnum between the former Prime Minister's resignation and the election of the new Prime Minister. It was the time when there seemed to be almost wall-to-wall coverage by the press and other media of the changes in the Conservative leadership. Therefore, there was very little coverage of what was happening in the House. Only subsequently has the world woken up to the Bill's implications.

Since that time the Bill has gone to the other place, which has overruled the Government's proposals. We are now faced with a Government amendment that is nearly as long as the Bill itself, and the Secretary of State refers to it as safeguards being built in when it is really a late-in-the-day rearguard action against a badly mauled Bill that should be withdrawn because of injury.

In opposing the Bill, the Confederation of British Industry says in its letter that no one wants the Bill and that The Bill has been rushed. Serious concerns only emerged during the last stages. I would argue that some of those concerns were raised on the Floor of the House, and it is on the record for those who care to reflect on it. We have argued throughout, and we repeat now, that it is the Government's policy in the Bill to reduce the state statutory social security contributions and to push those burdens on to the backs of employers, and ultimately the employees will have to pay the price.

The hon. Member for Teignmouth cited the editorial in The Times today. He should not believe all that he reads in every newspaper. This Bill was rooted in a report commissioned by the DHSS, and the Government claimed at the time that the vast majority of workers were covered by private occupational schemes. However, the details in that report show that 44 per cent. of all private sector firms and 55 per cent. of firms with fewer than 10 employees, which effectively accounts for 75 per cent. of firms, have no scheme whatsoever. How does that show that 90 per cent. are covered by private schemes? Even in firms where some occupational scheme exists, coverage is far from universal because the employees most commonly affected are covered by exclusion clauses; they are working part time in lower grades on low wages, so they are not included.

Effectively, nearly one in two schemes has exclusion clauses relating to the length of service and the hours of work. In other words, 72 per cent. of employees may be affected by those exclusion clauses. So the coverage is extremely limited and even the writer of The Times editorial might like to reflect on the true evidence that we ought to be considering instead of creating the impression that there is blanket coverage when there is not.

The Minister said in the past that fears were exaggerated. I remind the House that we were told that fears about the poll tax were exaggerated. There is a very interesting parallel—because what is the figure there? The Government insisted that everybody must pay at least 20 per cent. regardless of ability to pay. It was precisely that clause that landed the Government in the mess with the poll tax that they are now trying to clear up. The same is true of the uniform business rate and the unavailability —for—work test.

The Bill represents a further withdrawal of Government responsibility, significantly now at the worst of all possible times. The recession is manifestly worse. Interest rates are biting and everyone knows it. When the cornerstone store in Leeds—Lewis's—has to put a closed notice on its doors after having negotiated a wage cut of 7.5 per cent., it is clear that the economic policy of this country must be deeply flawed. Firms are beginning to pay the price.

Traditionally, Leeds is the city of small and medium-sized firms. The fact is that 4,500 small and medium-sized firms make up the city's commercial base. The Leeds chamber of commerce and industry wrote to me at the end of last month and said: At our recent Council meeting, our members were unanimous in expressing their opposition to the proposals to substantially alter the administrative procedures of Statutory Sick Pay. We are particularly concerned by the intention to reduce from 100% to 80% the amount by which employers are reimbursed by Government for payments made to sick employees by deduction from remittances of National Insurance Contributions … it was agreed that the existing principle behind SSP—that it is a state benefit administered by employers—should not be weakened and that the existing reimbursement of 100% should remain … we do not acknowledge that individual employers can expect such a neat balancing act and believe that many businesses will be adversely affected. One of our members with a large labour force reports that the cost of staff sickness is currently running at the rate of around £1.25 million to £1.5 million per annum. They estimate that the proposal to reduce the current level of reimbursement of employers' expenditure on SSP from 100% to 80% would cost them about £50,000 per annum. At a time when industry and commerce is under severe financial pressure we feel that it is totally inappropriate to bring forward such legislation". The letter is signed by the president of the Leeds chamber of commerce and industry. Tragically, he has had to announce 250 job losses in his own textile manufacturing company in the city. The Leeds chamber of commerce and industry knows about the pressures that small and medium-sized firms face. Some firms will have to pay back to the bank 21 per cent. in interest. They may employ only two or three people. Their margins are absolutely tight. Marginal costs can mean jobs lost. I urge the Secretary of State not to paper over the Bill by means of long amendments but to take it away and think again.

Miss Emma Nicholson

I have listened with increasing weariness to the rantings and ravings of Her Majesty's Opposition. Their opposition to this excellent measure seems to be based on the same tired, old and outdated battles on class structure and hatred of employers which makes the linkage with the Confederation of British Industry somewhat suspect. All hon. Members have received a battery of pleas from eminent employer organisations urging us to oppose the Bill. Might we now for a moment or two look at more logical reasons for not responding to the pleas of those organisations?

The point has been made that the Bill was introduced in haste. There is something in that argument. However, we have had a good debate and I suggest that the fact that the Secretary of State has considered the arguments sensitively shows that more time is not needed to debate the Bill and that it could easily be passed this evening.

Secondly, there is the question of timing and the difficulty of implementing such a measure during a recession. Small firms are the most immediately vulnerable during a recession. I received a good proposal from the National Farmers Union, but the proposals made by the Secretary of State in the form of amendments must go far enough to ease worries.

Thirdly, and most important of all—

Mr. Wallace

Will the hon. Lady give way?

Miss Nicholson

As I want to make a short speech, I hope that the hon. Gentleman will forgive me for not giving way.

Thirdly, there is the philosophical question: is it right that the Government should place the burden of responsibility for this modest proportion of statutory sick pay on employers? To that question I say, resoundingly, yes. Henry VIII—that excellent merry monarch—has already been mentioned in the debate. Is it not appropriate to think of employer-employee responsibilities as somewhat akin to marriage? In marriage one takes on one's partner in sickness and in health. That is also true of the partnership in the workplace. We cannot take on an employee and say that we shall take on only part of that employee—that we shall use that man or woman only if he or she is in 100 per cent. health. We take on the whole person—their skills, qualities and weaknesses—and also that person's liability, which all of us share, to fall sick from time to time.

6.45 pm

It is important to the health of British industry that there should be a far closer partnership between employer and employee. Germany is hugely successful. Japan—an even more dominant partner in the coming worldwide pattern of trade—has the closest possible link between employer and employee. I believe that the state makes a very bad third partner—indeed, a very bad mistress which could lead to divorce between employer and employee. By taking away responsibility from the two partners affected by the working partnership—the person in charge and the person who is taken on—the state causes grave difficulties for British industry and weakens the role of management as well as the position of the employee.

Why, therefore, should the state intervene in the first place by making any form of statutory sick pay provision? Why did the House of Commons pass such a measure? The primary role of the state is to set standards on behalf of society, to which society should adhere. The best employers already run excellent statutory sick pay schemes. However, there are many not-so-good employers. Therefore, the state has to set standards in order to ensure that all employers follow the best possible practice. That must be the primary role of the state. Its role is not to take responsibility off our shoulders, whether we be individual citizens or organisations, or large or tiny firms. The state must set standards for employers.

We have spoken at length about small firms. This is an article of faith to which both sides of the House seem to be firmly pinned, but large and medium-sized companies are just as important to the health of the British economy. The Bill will go a long way towards buttressing the good partnership between employer and employee at all levels of British business. I strongly support the Bill.

Mr. Frank Field

I wish to add one point and, perhaps surprisingly, to move the debate on from the speech that we have just heard from the hon. Member for Torridge and Devon, West (Miss Nicholson). If the hon. Lady were to suggest that I have joined the class rantings on this side of the House, although it may not further the debate, it may improve my chances in my constituency. That would be none too bad a thing.

My single point is that we are discussing an important and considerable change—a point that has not always been made clear in the speeches that I have heard. I am afraid that I was not here for the first part of the debate, as I wished to attend the meeting with the Polish ambassador. I oppose this change. I am not one of those who traditionally oppose change. It was the Labour party that first proposed the sale of council houses. I believed it to be an important means of spreading wealth in the community. Moreover, I want pension changes to be made that go far beyond those proposed by the Government. I also want those who are building up substantial private sector assets, in the form of pension funds, to have real control over those assets.

I am not committed to a state bureaucracy that delivers welfare benefits. I wish that we were debating a renaissance of friendly societies under which we could choose the means of receiving benefits. However, on the question of sickness pay and the national insurance scheme, I must take a stand. There is a coalition of interests between Members on both sides of the House. We are making a plea about rights of citizenship. There are some things in society that are so important and fundamental that provision must be made by the state. When the original sick pay scheme was introduced we lost that debate. I believe that the Government were able to get that change through the House only because employers and their representatives on the Government side were given a guarantee that it would involve no costs for employers.

The issue of principle at stake tonight is that that commitment is being broken in such a way that the weakest backs in industry will have to bear the burden. The Government are being given something of a fright. No Secretary of State introducing such a little rag-bag of amendments would have to spend an hour explaining them if there were not trouble from behind. That is especially so in this case because the Secretary of State for Social Security is one of the Government's best debaters. We all know that if the Government, despite their fright, get away with this, there will be another year, another series of negotiations, in which the Secretary of State will have to give as well as take. The Secretary of State knows that if he beats the employers by imposing these additional costs on them he will be able to come back on another occasion and increase the burden. The crucial commitment that was made is being broken. That is what we shall be voting about tonight, although we shall do so for differing reasons.

We have heard an awful lot from Opposition Members about small businesses. I am pleased about that. I wonder whether many people outside will regard the remarks as more than skin-deep. I hope that they were. Albeit with different motives, we are joining forces with people whose views we sometimes do not share. We are doing so because there is an important principle at stake. For Opposition Members, there are badges of citizenship that can very quickly be destroyed. The consequences of that destruction may not be felt immediately, but in the long term they may be seen in the form of social strife. Government Members have referred to the importance of small businesses and to the unfairness of putting the burden squarely on their shoulders so that other expenditure may be undertaken.

As I have said, there is in the House tonight a community of interests. For reasons that have been put forward by several hon. Members, I hope that we shall not simply support the amendments that have been forced on the Government by another place, but that we shall be able to persuade the Government to withdraw this squalid little measure—squalid not because the Secretary of State has in any way behaved dishonourably, but because there is a basic principle at stake. A commitment is being broken, and we are asking the poorest sections of the industrial world to bear the burden. There are hon. Members on both sides of the House who wish to ensure that this Bill will not go through.

Mr. John Browne (Winchester)

These are unusual times. The recession that we are experiencing is unusually deep—deeper than recessions that we have known before. It is amazing that the Government should choose such a time for this plan.

As the inflation rate drops, real interest rates are increasingly high, and rising by the week. In Winchester, Alton and other parts of the country, normally prudent people are being driven into bankruptcy. This is extremely serious. Indeed, the situation goes back well beyond the past decade. As my right hon. Friend the Secretary of State knows, I voted against our entry into the exchange rate mechanism because I believed that it would result in higher interest rates and higher unemployment than we would otherwise have. That is now happening. Interest rates are now dictated not by our own economy, which is calling hard, through deflation, for lower interest rates, but by our exchange rate. That is absolutely wrong.

Small businesses constitute one of the hardest-hit sections of our economy. The Government's measures to support small businesses have my absolute support. However—I have been put under considerable pressure not just to keep my speech short but not to speak at all —I must urge my right hon. Friend to withdraw this measure in view of our present very exceptional economic circumstances. The proposals should be withdrawn in the national interest.

Mr. Flynn

It is unfortunate that two hon. Members on the Government side were absent for the major part of the debate. Had they been here they would have heard not ranting from either side but very reasoned debate, indicating a community of interests. It is a matter to which my hon. Friend the Member for Birkenhead (Mr. Field) referred. On this subject, my credentials are rather similar to those of my hon. Friend, in that my maiden speech, too, was on the virtue of the sale of council houses. I raised that subject as a member of a Labour local authority that had been selling its houses for 20 years.

We heard a very unpleasant, spleen-hacked, neurotic diatribe from the hon. Member from Teignbridge (Mr. Nicholls), who managed to pack a smear into almost every syllable. It is unfortunate that the debate should be conducted in such a way. I commend to those hon. Members who have not read the report of the Lords debate that they do so in order that they might be made aware of the elevated quality of debate in that Chamber. As democrats we should adopt the decisions that were reached there.

It has been suggested again and again that all will be well if we throw employees to the wolves without statutory sick pay. It has been argued that they are already protected. Let us get the position exactly right. The report of the Institute for Fiscal Studies has been misunderstood by The Times. The IFS did not say that 91 per cent. of employees are covered by sick pay schemes; it said only that 91 per cent. of all employees work for employers in whose cases some people are in some circumstances covered by sick pay schemes. What is the truth? For those working in dangerous occupations, the situation is even worse. For those working in low-paid occupations, it is far worse. The Secretary of State said that we did not have to worry. He made the point that in the early stages of a job —the first few weeks—people do not very often go off sick. In fact, such people are the very ones who are often involved in serious accidents at work and who are therefore likely to need sick pay.

The citizens advice bureaux carried out a trawl, the findings of which contradict the rather rosy picture that has been presented by Government Members. The bureaux found that far more problems are now arising because of employment difficulties. Members of Parliament are aware of that. The bureaux refer to a Nottinghamshire case in which an employer considered a client's pregnancy to have been self-inflicted and refused to pay her SSP. In Devonshire, a client who had worked for eight months as a night care assistant had to go into hospital. When the employer, having been contacted by the DSS, eventually returned the SSP form he stated that the woman was no longer employed by him and that therefore she was not entitled to SSP. In Hertfordshire, in the space of one month, seven employers refused to pay SSP to clients who were eligible for it. In Shropshire, a person who lived in tied accommodation was dismissed after two weeks of sickness and received no SSP. In Buckinghamshire, in a five-week period, there were five cases of employers failing to pay SSP. A deeper trawl will show hundreds of such cases.

It is not true to say, as the Secretary Secretary of State did, that there is some quid pro quo between the advantage to employers of lower contributions to national insurance and what will happen under the Bill. There is no linkage. All employers will benefit from the national insurance changes, but only employers unfortunate enough to have much sickness among their employees will suffer because of the Bill. We are placing a burden on employers, and the Bill will be a disincentive for them to employ disabled people or those whom they perceive as likely to suffer from long periods of sickness.

7 pm

The hon. Member for Torridge and Devon, West (Miss Nicholson) referred to Henry VIII, and many of us would query her picture of him as a model parent and husband. The other place threw out the worst feature of the "Henry VIII clause". We have heard from courageous Conservative Members, employers' associations and trade unions a hallelujah chorus of protest against the idiocy of the Bill.

Mr. Thomas Graham (Renfrew, West and Inverclyde)

Is my hon. Friend aware that the Bill is causing tremendous anxiety in Scotland? I have received a letter from Bill Knox, who is a well-known campaigner on behalf of the small business federations in Scotland. He says: The Government are pushing through a new Bill on S.S.P. which will destroy the principle that the State pays Statutory Benefits to employees. Most organisations in Scotland are absolutely opposed to this stupid, silly measure that the Government have thought up.

Mr. Flynn

I am delighted to hear that the Scottish singers in the hallelujah chorus are in harmony with the rest of the country.

The Bill is discredited, wretched and friendless and we should throw it out.

Mr. Allen McKay

I place on record the views not of the employers' federations but of a small factory in my constituency which faces bankruptcy. The work force believed that they could make the business work, took it over and made it work. They phoned me today and said that if the Bill is passed it will probably shove them over the brink.

It is the principle that matters. Not only have the Government broken a promise, but they have had the effrontery to jeopardise the future of the scheme. Subsections (2) and (3) of clause 1 give the Government power to alter it without reference to the House, and that is wrong.

We are seeing a change in Government policy. The Secretary of State is always talking about the employers' contribution to the scheme. A good employer always added to the state provision for his work force, but the Government are now legislating for an alternative. The Government see occupational pension schemes as the future; employees and employers will pay, but the state will back out of its obligation to look after sick and retired people. That is what the Bill is all about. If the House has any common sense, it will throw out the Bill or, at worst, accept the Lords amendments.

Ms. Short

This is a dishonourable Bill which has been introduced in a dishonourable way. I am sorry to say that to the Secretary of State. I know that he is not a dishonourable man, but the record speaks for itself.

The Bill is a complete breach of the agreement made between the Government and employers' organisations, after considerable discussion and debate, that when statutory sick pay was introduced there would be 100 per cent. reimbursement and that the costs of administering the scheme would be repaid. That promise has been breached, and there is a sense of fury about that among employers' organisations. The hon. Member for Devon, North (Mr. Speller) rightly said that integrity is involved. The Government have broken their word.

The Secretary of State gave three examples in which the employer would gain. I am afraid that that argument is dishonourable. We know that the package involves a saving. Any gains therefore mean other and larger losses elsewhere. To try to impress his hon. Friends, who are clearly disturbed about the Bill, with three examples of gainers when he knew that there must be more losers than gainers was dishonourable.

The Government knew that they had to be furtive about the Bill, which was brought before the House with indecent haste. It was given a Second Reading on a Monday and its Committee stage was held on the Floor of the House on the Wednesday. We know the purpose of that: the Government did not want to allow employers' organisations time to mobilise. They had fought before on the issue and would fight again. The Government fixed the business of the House so that they could not do so, which is why the brunt of the opposition to the Bill was expressed in the other place. That was another dishonourable act by the Government.

The Bill affects the interests of not only employers but workers. The change being made is part of a package of serious cuts in sick pay for employees. The uprating removes 3 million employees from eligibility for the higher rate of statutory sick pay. As a result, some 600,000 people stand to lose an average of £9 a week when they are sick, in addition to the 300,000 who will lose £13 a week as a result of the changes in sick pay entitlement that will take effect in April. No fewer than 5 million people have had their entitlement to statutory sick pay reduced in the past two years. That is an uncivilised move. If we live in a caring society that offers a decent standard of living, we should at least guarantee that if any of us have to take time off work because of sickness we shall be cared for and not forced on to means-tested benefits, with all the worries that that causes when another member of the family is working.

The whole move, which is part of a plan to privatise sick pay, is deeply regressive. As my hon. Friend the Member for Leeds, West (Mr. Battle) pointed out, this proposal was made under the old Thatcherite Government, but this Government have not had time to throw it away. There is no doubt but that the best way of ensuring that everyone is protected is a national insurance scheme.

The Government want to privatise, and to do so they misuse statistics—this is another dishonourable feature —by saying that 91 per cent. of employees work for firms that offer an occupational sick pay scheme. That is a deeply dishonest figure. A firm that employed thousands of manual workers but offered a small scheme only to senior management would be included in that statistic. It is outrageous and misleading, but I am sorry to say that the Secretary of State keeps using it.

Occupational sick pay schemes build on state provision. Someone who is lucky enough to be in an occupational sickness scheme negotiates with his employer for him to build on the national insurance system.

The change has been made, apart from the questionable ideology behind it, because the Secretary of State was pressurised in the expenditure round. He had to do something with child benefit because it was becoming such an embarrassment. He found a little bit of money for the first born instead of uprating the benefit properly. I know that he has been concerned to do something for low-income elderly pensioners, but the Treasury would not give him anything and said, "If you want to increase child benefit, you must pay with something else out of your budget." Therefore, reluctantly, he gave up statutory sick pay and was forced into all the dishonour that we are discussing.

What is wrong is all the restraint imposed on the Secretary of State by other people. I respect him enough to think that if he was in control of these matters, things might be different; perhaps that is being over-trusting. Here the sick are being required to pay for benefits for the elderly and for children. That is wrong. Under the Government we have seen massive redistribution. If we accumulate the benefits and tax changes, what has happened? Up to 1989, £6.5 billion has been taken from the bottom 50 per cent. of the population and £4.6 billion of it has been given to the top 5 per cent. That is what it is all about. The Government have given away so much to the very rich in society that they have to take money from the sick for child benefit because they are so deeply embarrassed by their failure to improve it in the past.

All of this comes during the most frightening recession which is not being discussed politically because we are all preoccupied with the situation in the Gulf. The figures, which are coming in sharp and hard, and the personal experiences make the recession look as bad as that in 1980–81. I hope and pray that it will not be as bad. That recession destroyed my region and my constituency, and I hope that the same will not happen again. Firms are going bust all over the land. I cannot believe that Lewis's, where I went as a child to see Father Christmas, has gone.

The changes in statutory sick pay will come on top of the recession. They will tip some firms over. The hon. Member for Teignbridge (Mr. Nicholls) makes an art form out of nastiness—that is not intended as a compliment. I do not know how it is in his part of the world, but in Ladywood vast numbers of people who run small businesses vote Labour. Whether Afro-Caribbean, Asian or white, their interests lie with the well-being of the local community. Their children are local, unemployed young people; they worry about local schools; they are Labour voters in significant numbers.

I was surprised when my hon. Friend the Member for Birkenhead (Mr. Field) went along with the line put forward by the hon. Member for Teignbridge. Perhaps things are different in Birkenhead, but certainly in Ladywood many small business men vote Labour and are members of the Labour party. The hon. Member for Teignbridge is an ideologist. He has forgotten that the former leader, the one who would be impressed with his style of speech, is not in office any more. We are supposed to pretend that the Tory party is in favour of a classless society, as we screw the people who are sick in order to pay benefits to the elderly and the poor.

Mr. Nicholls

rose—

Ms. Short

I will not give way to the hon. Gentleman. If he changed his behaviour when people give way, I would think of doing so.

Mr. Nicholls

Give way and see.

Ms. Short

I do not believe it; I have seen the hon. Gentleman perform too often.

My hon. Friends and I agree with small businesses, the interests of people who are sick and the other place that the Bill should be withdrawn. If it is not, we shall support the amendments that were made in the other place which would at least improve the Bill somewhat.

The other insidious thing in the package is that when the Bill started, the Government took the power by negative resolution of the House to change the 80 per cent. rate. Clearly the plan was to keep reducing it. We moved an amendment to make the change by affirmative resolution and the Government accepted that. When the Bill got to the other place, they said that there had to be separate legislation. Of course, the Government hated that because it stopped the privatisation package, but they could hardly change it when it came back here without saying to the world, "Our plan is revealed." Reluctantly, they had to give in. We welcome that.

We support the amendment made in the other place that this should be a cost neutral package, we support the 91 per cent. provision that the Government have rejected, and we support the provisions made in the other place to protect small businesses, which are more generous than the measly proposals that the Secretary of State put before the House.

I am sorry to have had to put the case of dishonour to the right hon. Gentleman, but I believe it to be true. That is what we are considering this evening.

Mr. Newton

I shall be exceptionally brief for reasons which I hope the House will understand. I have already spoken at great length and I answered a huge number of points that were put to me during my opening speech.

I have made it clear to my hon. Friends that I recognise, even though I do not always agree with, some of the anxieties they have expressed. The combination of measures which I have brought forward, including the additional safeguard for small businesses, generously defined, in respect of periods of sickness going beyond six weeks, goes a long way to meet their concerns. Taken together with the fact that has emerged from some comments from the Opposition Benches that many small employers do not have occupational sick pay schemes and therefore will not be affected in the same way as those who do, the combination of facts leads me to believe that there are proper and appropriate safeguards which will ensure that large numbers of small businesses gain and will not lose from the package of proposals which I have put forward.

7.15 pm

I wish to make only one or two other points. I hope that the hon. Member for Birmingham, Ladywood (Ms. Short) will regret in due course the persistent use of words such as "dishonour" and "dishonourable". I will not quarrel with her at length, but this enables me to wrap up almost everything that I want to say to Opposition Members. I see nothing dishonourable, in a context in which there are endless demands for additional social security spending on many good causes, in being prepared to look across the scene to identify the areas where changes have taken place since the beginning of the welfare state and to make sure that we are spending the money which we can make available, however much it is, in the best way that we can spend it.

I say to the hon. Members for Birkenhead (Mr. Field) and Oldham, West (Mr. Meacher) that the growth of occupational sick pay schemes represents a big change in the perception of people about where the burdens of looking after short-term sickness should lie. Employers have accepted a greater share of that burden. In those circumstances, I welcome the opportunity and the scope to divert more of the resources which I can make available from the taxpayer and the contributer to the poorer pensioners who do not have much money, to those in residential care and nursing homes and to the long-term sick and disabled.

I will not accept that that is dishonourable. I will not apologise for it. I think that this is a sensible package, improved by the amendments that I have proposed, and I commend it to the House.

Question put and agreed to.

Lords amendments Nos. 1 and 2 agreed to.—[Special entry.]

Lords amendment No. 3: In page 1, line 14, leave out "80" and insert "91"

Question put, That this House doth disagree with the Lords in the said amendment.—[Mr. Newton.]

The House divided: Ayes 316, Noes 236.

Division No. 57]	[7.17 pm
AYES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Aitken, Jonathan	Carrington, Matthew
Alexander, Richard	Carttiss, Michael
Alison, Rt Hon Michael	Cash, William
Allason, Rupert	Chapman, Sydney
Amery, Rt Hon Julian	Chope, Christopher
Amos, Alan	Churchill, Mr
Arbuthnot, James	Clark, Rt Hon Alan (Plymouth)
Ashby, David	Clark, Dr Michael (Rochford)
Aspinwall, Jack	Clark, Rt Hon Sir William
Atkins, Robert	Clarke, Rt Hon K. (Rushcliffe)
Atkinson, David	Conway, Derek
Baker, Rt Hon K. (Mole Valley)	Coombs, Anthony (Wyre F'rest)
Baker, Nicholas (Dorset N)	Coombs, Simon (Swindon)
Baldry, Tony	Cope, Rt Hon John
Banks, Robert (Harrogate)	Cormack, Patrick
Batiste, Spencer	Couchman, James
Bellingham, Henry	Critchley, Julian
Bendall, Vivian	Currie, Mrs Edwina
Bennett, Nicholas (Pembroke)	Curry, David
Benyon, W.	Davies, Q. (Stamf'd & Spald'g)
Biffen, Rt Hon John	Davis, David (Boothferry)
Blackburn, Dr John G.	Day, Stephen
Blaker, Rt Hon Sir Peter	Devlin, Tim
Body, Sir Richard	Dickens, Geoffrey
Bonsor, Sir Nicholas	Dorrell, Stephen
Boscawen, Hon Robert	Douglas-Hamilton, Lord James
Boswell, Tim	Dunn, Bob
Bottomley, Peter	Durant, Sir Anthony
Bottomley, Mrs Virginia	Dykes, Hugh
Bowden, A (Brighton K'pto'n)	Eggar, Tim
Bowden, Gerald (Dulwich)	Emery, Sir Peter
Bowis, John	Evans, David (Welwyn Hatf'd)
Boyson, Rt Hon Dr Sir Rhodes	Evennett, David
Brandon-Bravo, Martin	Fallon, Michael
Brazier, Julian	Favell, Tony
Bright, Graham	Fenner, Dame Peggy
Brooke, Rt Hon Peter	Fishburn, John Dudley
Brown, Michael (Brigg & Cl't's)	Fookes, Dame Janet
Bruce, Ian (Dorset South)	Forman, Nigel
Buck, Sir Antony	Forsyth, Michael (Stirling)
Budgen, Nicholas	Forth, Eric
Burns, Simon	Fowler, Rt Hon Sir Norman
Burt, Alistair	Fox, Sir Marcus
Butler, Chris	Franks, Cecil
Butterfill, John	Freeman, Roger
Carlisle, John, (Luton N)	French, Douglas

Fry, Pete	Lyell, Rt Hon Sir Nicholas
Gale, Roger	Macfarlane, Sir Neil
Gardiner, Sir George	MacGregor, Rt Hon John
Garel-Jones, Tristan	MacKay, Andrew (E Berkshire)
Gilmour, Rt Hon Sir Ian	Maclean, David
Glyn, Dr Sir Alan	McLoughlin, Patrick
Goodhart, Sir Philip	McNair-Wilson, Sir Michael
Goodlad, Alastair	McNair-Wilson, Sir Patrick
Gorman, Mrs Teresa	Madel, David
Gorst, John	Malins, Humfrey
Grant, Sir Anthony (CambsSW)	Mans, Keith
Greenway, Harry (Ealing N)	Maples, John
Greenway, John (Ryedale)	Marland, Paul
Gregory, Conal	Marlow, Tony
Griffiths, Peter (Portsmouth N)	Marshall, John (Hendon S)
Grist, Ian	Marshall, Sir Michael (Arundel)
Ground, Patrick	Martin, David (Portsmouth S)
Grylls, Michael	Mates, Michael
Hague, William	Maude, Hon Francis
Hamilton, Hon Archie (Epsom)	Mawhinney, Dr Brian
Hamilton, Neil (Tatton)	Mayhew, Rt Hon Sir Patrick
Hanley, Jeremy	Mellor, Rt Hon David
Hannam, John	Meyer, Sir Anthony
Hargreaves, A. (B'ham H'll Gr')	Miller, Sir Hal
Hargreaves, Ken (Hyndburn)	Miscampbell, Norman
Harris, David	Mitchell, Andrew (Gedling)
Haselhurst, Alan	Mitchell, Sir David
Hayes, Jerry	Moate, Roger
Hayhoe, Rt Hon Sir Barney	Monro, Sir Hector
Hayward, Robert	Montgomery, Sir Fergus
Heathcoat-Amory, David	Morris, M (N'hampton S)
Heseltine, Rt Hon Michael	Morrison, Sir Charles
Hicks, Mrs Maureen (Wolv' NE)	Moss, Malcolm
Hicks, Robert (Cornwall SE)	Moynihan, Hon Colin
Higgins, Rt Hon Terence L.	Mudd, David
Hill, James	Neale, Sir Gerrard
Hind, Kenneth	Needham, Richard
Hogg, Hon Douglas (Gr'th'm)	Nelson, Anthony
Hordern, Sir Peter	Neubert, Sir Michael
Howard, Rt Hon Michael	Newton, Rt Hon Tony
Howarth, Alan (Strat'd-on-A)	Nicholls, Patrick
Howarth, G. (Cannock & B'wd)	Nicholson, David (Taunton)
Howe, Rt Hon Sir Geoffrey	Nicholson, Emma (Devon West)
Howell, Rt Hon David (G'dford)	Norris, Steve
Howell, Ralph (North Norfolk)	Onslow, Rt Hon Cranley
Hughes, Robert G. (Harrow W)	Oppenheim, Phillip
Hunt, David (Wirral W)	Page, Richard
Hunt, Sir John (Ravensbourne)	Paice, James
Hurd, Rt Hon Douglas	Parkinson, Rt Hon Cecil
Irvine, Michael	Patnick, Irvine
Irving, Sir Charles	Patten, Rt Hon Chris (Bath)
Jack, Michael	Patten, Rt Hon John
Jackson, Robert	Pawsey, James
Janman, Tim	Porter, Barry (Wirral S)
Jessel, Toby	Porter, David (Waveney)
Johnson Smith, Sir Geoffrey	Portillo, Michael
Jones, Gwilym (Cardiff N)	Powell, William (Corby)
Jones, Robert B (Herts W)	Price, Sir David
Jopling, Rt Hon Michael	Raffan, Keith
Kellett-Bowman, Dame Elaine	Raison, Rt Hon Sir Timothy
Key, Robert	Redwood, John
King, Roger (B'ham N'thfield)	Renton, Rt Hon Tim
King, Rt Hon Tom (Bridgwater)	Rhodes James, Robert
Kirkhope, Timothy	Riddick, Graham
Knapman, Roger	Ridley, Rt Hon Nicholas
Knight, Greg (Derby North)	Ridsdale, Sir Julian
Knight, Dame Jill (Edgbaston)	Rifkind, Rt Hon Malcolm
Knowles, Michael	Roberts, Sir Wyn (Conwy)
Knox, David	Roe, Mrs Marion
Lamont, Rt Hon Norman	Rost, Peter
Lang, Rt Hon Ian	Rowe, Andrew
Lawrence, Ivan	Rumbold, Rt Hon Mrs Angela
Lawson, Rt Hon Nigel	Ryder, Rt Hon Richard
Lee, John (Pendle)	Sainsbury, Hon Tim
Leigh, Edward (Gainsbor'gh)	Sayeed, Jonathan
Lennox-Boyd, Hon Mark	Scott, Rt Hon Nicholas
Lester, Jim (Broxtowe)	Shaw, David (Dover)
Lilley, Peter	Shaw, Sir Giles (Pudsey)
Lloyd, Sir Ian (Havant)	Shaw, Sir Michael (Scarb')
Lord, Michael	Shelton, Sir William

Shephard, Mrs G. (Norfolk SW)	Tredinnick, David
Shepherd, Colin (Hereford)	Trippier, David
Shersby, Michael	Trotter, Neville
Sims, Roger	Twinn, Dr Ian
Skeet, Sir Trevor	Vaughan, Sir Gerard
Smith, Sir Dudley (Warwick)	Viggers, Peter
Smith, Tim (Beaconsfield)	Waldegrave, Rt Hon William
Soames, Hon Nicholas	Walden, George
Speed, Keith	Walker, Bill (T'side North)
Spicer, Sir Jim (Dorset W)	Walker, Rt Hon P. (W'cester)
Spicer, Michael (S Worcs)	Waller, Gary
Squire, Robin	Walters, Sir Dennis
Stanbrook, Ivor	Ward, John
Stanley, Rt Hon Sir John	Wardle, Charles (Bexhill)
Steen, Anthony	Warren, Kenneth
Stern, Michael	Watts, John
Stevens, Lewis	Wells, Bowen
Stewart, Allan (Eastwood)	Wheeler, Sir John
Stewart, Andy (Sherwood)	Whitney, Ray
Stewart, Rt Hon Ian (Herts N)	Widdecombe, Ann
Sumberg, David	Wiggin, Jerry
Summerson, Hugo	Wilkinson, John
Tapsell, Sir Peter	Wilshire, David
Taylor, Ian (Esher)	Wolfson, Mark
Taylor, Teddy (S'end E)	Wood, Timothy
Tebbit, Rt Hon Norman	Woodcock, Dr. Mike
Temple-Morris, Peter	Yeo, Tim
Thompson, D. (Calder Valley)	Young, Sir George (Acton)
Thompson, Patrick (Norwich N)	Younger, Rt Hon George
Thorne, Neil
Thurnham, Peter	Tellers for the Ayes:
Townsend, Cyril D. (B'heath)	Mr. John M. Taylor and
Tracey, Richard	Mr. Tom Sackville.
NOES
Abbott, Ms Diane	Clwyd, Mrs Ann
Adams, Mrs. Irene (Paisley, N.)	Cook, Robin (Livingston)
Allen, Graham	Corbett, Robin
Alton, David	Corbyn, Jeremy
Anderson, Donald	Cousins, Jim
Archer, Rt Hon Peter	Cox, Tom
Armstrong, Hilary	Crowther, Stan
Ashdown, Rt Hon Paddy	Cryer, Bob
Ashley, Rt Hon Jack	Cummings, John
Ashton, Joe	Cunliffe, Lawrence
Banks, Tony (Newham NW)	Dalyell, Tam
Barnes, Harry (Derbyshire NE)	Darling, Alistair
Barnes, Mrs Rosie (Greenwich)	Davies, Rt Hon Denzil (Llanelli)
Barron, Kevin	Davies, Ron (Caerphilly)
Battle, John	Davis, Terry (B'ham Hodge H'I)
Beckett, Margaret	Dewar, Donald
Beith, A. J.	Dixon, Don
Bell, Stuart	Douglas, Dick
Bellotti, David	Duffy, A. E. P.
Benn, Rt Hon Tony	Dunnachie, Jimmy
Bennett, A. F. (D'nt'n & R'dish)	Dunwoody, Hon Mrs Gwyneth
Benton, Joseph	Eadie, Alexander
Bermingham, Gerald	Evans, John (St Helens N)
Bevan, David Gilroy	Ewing, Harry (Falkirk E)
Bidwell, Sydney	Fatchett, Derek
Blair, Tony	Faulds, Andrew
Boateng, Paul	Field, Frank (Birkenhead)
Boyes, Roland	Fields, Terry (L'pool B G'n)
Bradley, Keith	Fisher, Mark
Bray, Dr Jeremy	Flynn, Paul
Brown, Gordon (D'mline E)	Foot, Rt Hon Michael
Brown, Nicholas (Newcastle E)	Foster, Derek
Brown, Ron (Edinburgh Leith)	Foulkes, George
Browne, John (Winchester)	Fraser, John
Bruce, Malcolm (Gordon)	Fyfe, Maria
Buckley, George J.	Galbraith, Sam
Caborn, Richard	Garrett, John (Norwich South)
Callaghan, Jim	Garrett, Ted (Wallsend)
Campbell, Menzies (Fife NE)	George, Bruce
Campbell, Ron (Blyth Valley)	Golding, Mrs Llin
Campbell-Savours, D. N.	Gordon, Mildred
Canavan, Dennis	Gould, Bryan
Cartwright, John	Graham, Thomas
Clarke, Tom (Monklands W)	Grant, Bernie (Tottenham)
Clelland, David	Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)	Loyden, Eddie
Grocott, Bruce	McAllion, John
Hardy, Peter	McAvoy, Thomas
Haynes, Frank	McCartney, Ian
Heal, Mrs Sylvia	Macdonald, Calum A.
Healey, Rt Hon Denis	McFall, John
Hinchliffe, David	McKay, Allen (Barnsley West)
Hoey, Ms Kate (Vauxhall)	McKelvey, William
Hogg, N. (C'nauld & Kilsyth)	McLeish, Henry
Home Robertson, John	Maclennan, Robert
Hood, Jimmy	McMaster, Gordon
Howarth, George (Knowsley N)	McNamara, Kevin
Howells, Geraint	McWilliam, John
Howells, Dr. Kim (Pontypridd)	Madden, Max
Hoyle, Doug	Mahon, Mrs Alice
Hughes, John (Coventry NE)	Marek, Dr John
Hughes, Robert (Aberdeen N)	Marshall, David (Shettleston)
Hughes, Roy (Newport E)	Marshall, Jim (Leicester S)
Hughes, Simon (Southwark)	Martin, Michael J. (Springburn)
Illsley, Eric	Martlew, Eric
Ingram, Adam	Maxton, John
Janner, Greville	Maxwell-Hyslop, Robin
Johnston, Sir Russell	Meacher, Michael
Jones, Barry (Alyn & Deeside)	Meale, Alan
Jones, Ieuan (Ynys Môn)	Michael, Alun
Jones, Martyn (Clwyd S W)	Michie, Bill (Sheffield Heeley)
Kaufman, Rt Hon Gerald	Michie, Mrs Ray (Arg'l & Bute)
Kennedy, Charles	Mitchell, Austin (G't Grimsby)
Kilfedder, James	Molyneaux, Rt Hon James
Kinnock, Rt Hon Neil	Moonie, Dr Lewis
Kirkwood, Archy	Morley, Elliot
Lambie, David	Morris, Rt Hon A. (W'shawe)
Lamond, James	Mowlam, Marjorie
Leadbitter, Ted	Mullin, Chris
Leighton, Ron	Murphy, Paul
Lestor, Joan (Eccles)	Nellist, Dave
Lewis, Terry	Oakes, Rt Hon Gordon
Litherland, Robert	O'Brien, William
Livingstone, Ken	O'Hara, Edward
Livsey, Richard	O'Neill, Martin
Lloyd, Tony (Stretford)	Orme, Rt Hon Stanley
Lofthouse, Geoffrey	Parry, Robert

.—(1) In section 9 of the Social Security and Housing Benefits Act 1982, before subsection (2) (meaning of "contributions payments") there shall be inserted—

1. "(1B) For the purposes of this section, a payment of statutory sick pay which an employer is liable to make to an employee for any day qualifies for small employers' relief if the employer is a small employer who has before that day been liable to make such payments of statutory sick pay as entitle him to relief in respect of that payment.
2. (1C) For the purposes of this section, "small employer" shall be defined by regulations by reference to the aggregate of the employer's and the employee's contributions payments for any prescribed period, such aggregate to be reviewed annually having regard to the increase in earnings and the effect of any such increase on the amount of contributions payments.
3. (1D) Regulations shall prescribe the payments of statutory sick pay that entitle a small employer to small employer's relief in respect of any particular payment, and that entitlement shall be determined by reference to the number of weeks for which the employer has been liable to pay statutory sick pay in respect of the employee in question in a prescribed period.
4. (1E) The first regulations made under this section shall prescribe that the amount of the aggregate of the employer's and the employee's contributions payments, and the number of weeks for which the employer has been liable to pay statutory sick pay in respect of the employee in question shall be in accordance with the following table:—

Question accordingly agreed to.

Lords amendment accordingly disagreed to.

Lords amendments Nos. 4 to 6 agreed to.—[Special entry.]

Lords amendment No. 7: After clause 1, insert the following new clause—Small employers' relief—

Read a Second time.

Amendment (a) proposed to the Lords amendment, in line 7, leave out from 'day' to end of line 35 and insert— `which forms part of a period of incapacity for work qualifies for small employers' relief if—

1. (a) on that day the employer is a small employer who has been liable to pay statutory sick pay in respect of that employee for earlier days forming part of that period of incapacity for work; and
2. (b) the aggregate amount of those payments exceeds the entitlement threshold, that is to say an amount equal to W x R, where—
   • W is a prescribed number of weeks; and
   • R is the appropriate weekly rate set out in section above;
   and regulations may make provision for calculating the entitlement threshold in any case where the employee's entitlement to statutory sick pay is calculated by reference to different weekly rates in the same period of incapacity for work.

(1C) If the Secretary of State by order so provides for any tax year, the following subsections shall have effect for that tax year in substitution for subsection (1B) above—

"(1BB) For the purposes of this section, a payment of statutory sick pay which an employer is liable to make to an employee for any day in a tax year qualifies for small employers' relief if—

1. (a) on that day the employer is a small employer who has been liable to make payments of statutory sick pay for earlier days in that tax year in respect of any employees of his; and
2. (b) the aggregate of any such payments for those earlier days exceeds a prescribed sum.

(1BC) In any case where—

1. (a) an employer is liable to make two or more payments of statutory sick pay for the same day in a tax year, and
2. (b) by virtue of the condition in subsection (1BB)(b) above, none of those payments would qualify for small employers' relief, but
3. (c) that condition would have been fulfilled in relation to a proportion of the aggregate amount of those payments, had he been liable—
1. (i) to pay as statutory sick pay for an earlier day in that tax year, instead of for the day in question, the smallest part of that aggregate that would enable that condition to be fulfilled, and
2. (ii) to pay the remainder as statutory sick pay for the day in question,

he shall be treated for the purposes of subsection (1BB) above

Aggregate contributions in the previous contributions year	Number of weeks before small employers' relief applies
less than £15,000	6
less than £10,000	3
less than £5,000	0

(1F) A statutory instrument containing (whether alone or with other provisions) regulations under subsection (1C) or (1D) above shall not be made unless a draft of it has been laid before Parliament and approved by a resolution of each House."

• (2) In subsection (2) of that section (meaning of "contributions payments" in subsections (1)(a) and (1A)) for the words "and subsection (1A)" there shall be substituted the words "and subsection (1C)".
• (3) In Part II of Schedule 5 to the Social Security Act 1986 (questions for the Secretary of State) in paragraph (b), after sub-paragraph (v) there shall be inserted the words "or

(vi) the amount of an employer's contributions payments for any period for the purposes of regulations under section 9(1C) of that Act.""

as if he had been liable to make payments of statutory sick pay as mentioned in paragraph (c) above instead of as mentioned in paragraph (a) above.

(1BD) If, in a case not falling within subsection (1BC) above—

1. (a) an employer is liable to make a single payment of statutory sick pay for a day in a tax year, and
2. (b) by virtue of the condition in subsection (1BB)(b) above, that payment would not qualify for small employers' relief, but
3. (c) that condition would have been fulfilled in relation to a proportion of that payment, had he been liable—
1. (i) to pay as statutory sick pay for an earlier day in that tax year, instead of for the day in question, the smallest part of that payment that would enable that condition to be fulfilled, and
2. (ii) to pay the remainder as statutory sick pay for the day in question,

he shall be treated for the purposes of subsection (1BB) above as if he had been liable to make payments of statutory sick pay as mentioned in paragraph (c) above instead of the payment mentioned in paragraph (a) above.";

and, without prejudice to section 45(1) below, the Secretary of State may by regulations make such transitional or consequential provision or savings as he considers necessary or expedient in connection with the coming into force of an order under this subsection of the expiry or revocation of any such order and the consequent revival of subsection (1B) above. (1D) For the purposes of this section, "small employer" shall have the meaning assigned to it by regulations, and, without prejudice to the generality of the foregoing, any such regulations—

1. (a) may define that expression by reference to the amount of an employer's contributions payments for any prescribed period; and
2. (b) if they do so, may in that connection make provision for the amount of those payments for that prescribed period—
1. (i) to be determined without regard to any deductions that may be made from them under this section or under any other enactment or instrument; and
2. (ii) in prescribed circumstances, to be adjusted, estimated or otherwise attributed to him by reference to their amount in any other prescribed period.

(1E) If and so long as regulations under subsection (1D) above prescribe an amount which an employer's contributions payments must not exceed if he is to be a small employer for the purposes of this section, the Secretary of State shall in each tax year consider whether that amount should be increased, having regard to any increase in the aggregate amount of all primary and secondary Class 1 contributions payable in Great Britain and such other matters as he considers appropriate.'.—[Mr. Newton.]

Question put,That the amendment to the Lords amendment be made:—

The House divided: Ayes 318, Noes 233.

Division No. 57]	[7.17 pm
AYES
Adley, Robert	Carlisle, Kenneth (Lincoln)
Aitken, Jonathan	Carrington, Matthew
Alexander, Richard	Carttiss, Michael
Alison, Rt Hon Michael	Cash, William
Allason, Rupert	Chapman, Sydney
Amery, Rt Hon Julian	Chope, Christopher
Amos, Alan	Churchill, Mr
Arbuthnot, James	Clark, Rt Hon Alan (Plymouth)
Ashby, David	Clark, Dr Michael (Rochford)
Aspinwall, Jack	Clark, Rt Hon Sir William
Atkins, Robert	Clarke, Rt Hon K. (Rushcliffe)
Atkinson, David	Conway, Derek
Baker, Rt Hon K. (Mole Valley)	Coombs, Anthony (Wyre F'rest)
Baker, Nicholas (Dorset N)	Coombs, Simon (Swindon)
Baldry, Tony	Cope, Rt Hon John
Banks, Robert (Harrogate)	Cormack, Patrick
Batiste, Spencer	Couchman, James
Bellingham, Henry	Critchley, Julian
Bendall, Vivian	Currie, Mrs Edwina
Bennett, Nicholas (Pembroke)	Curry, David
Benyon, W.	Davies, Q. (Stamf'd & Spald'g)
Biffen, Rt Hon John	Davis, David (Boothferry)
Blackburn, Dr John G.	Day, Stephen
Blaker, Rt Hon Sir Peter	Devlin, Tim
Body, Sir Richard	Dickens, Geoffrey
Bonsor, Sir Nicholas	Dorrell, Stephen
Boscawen, Hon Robert	Douglas-Hamilton, Lord James
Boswell, Tim	Dunn, Bob
Bottomley, Peter	Durant, Sir Anthony
Bottomley, Mrs Virginia	Dykes, Hugh
Bowden, A (Brighton K'pto'n)	Eggar, Tim
Bowden, Gerald (Dulwich)	Emery, Sir Peter
Bowis, John	Evans, David (Welwyn Hatf'd)
Boyson, Rt Hon Dr Sir Rhodes	Evennett, David
Brandon-Bravo, Martin	Fallon, Michael
Brazier, Julian	Favell, Tony
Bright, Graham	Fenner, Dame Peggy
Brooke, Rt Hon Peter	Fishburn, John Dudley
Brown, Michael (Brigg & Cl't's)	Fookes, Dame Janet
Bruce, Ian (Dorset South)	Forman, Nigel
Buck, Sir Antony	Forsyth, Michael (Stirling)
Budgen, Nicholas	Forth, Eric
Burns, Simon	Fowler, Rt Hon Sir Norman
Burt, Alistair	Fox, Sir Marcus
Butler, Chris	Franks, Cecil
Butterfill, John	Freeman, Roger
Carlisle, John, (Luton N)	French, Douglas

Fry, Pete	Lyell, Rt Hon Sir Nicholas
Gale, Roger	Macfarlane, Sir Neil
Gardiner, Sir George	MacGregor, Rt Hon John
Garel-Jones, Tristan	MacKay, Andrew (E Berkshire)
Gilmour, Rt Hon Sir Ian	Maclean, David
Glyn, Dr Sir Alan	McLoughlin, Patrick
Goodhart, Sir Philip	McNair-Wilson, Sir Michael
Goodlad, Alastair	McNair-Wilson, Sir Patrick
Gorman, Mrs Teresa	Madel, David
Gorst, John	Malins, Humfrey
Grant, Sir Anthony (CambsSW)	Mans, Keith
Greenway, Harry (Ealing N)	Maples, John
Greenway, John (Ryedale)	Marland, Paul
Gregory, Conal	Marlow, Tony
Griffiths, Peter (Portsmouth N)	Marshall, John (Hendon S)
Grist, Ian	Marshall, Sir Michael (Arundel)
Ground, Patrick	Martin, David (Portsmouth S)
Grylls, Michael	Mates, Michael
Hague, William	Maude, Hon Francis
Hamilton, Hon Archie (Epsom)	Mawhinney, Dr Brian
Hamilton, Neil (Tatton)	Mayhew, Rt Hon Sir Patrick
Hanley, Jeremy	Mellor, Rt Hon David
Hannam, John	Meyer, Sir Anthony
Hargreaves, A. (B'ham H'll Gr')	Miller, Sir Hal
Hargreaves, Ken (Hyndburn)	Miscampbell, Norman
Harris, David	Mitchell, Andrew (Gedling)
Haselhurst, Alan	Mitchell, Sir David
Hayes, Jerry	Moate, Roger
Hayhoe, Rt Hon Sir Barney	Monro, Sir Hector
Hayward, Robert	Montgomery, Sir Fergus
Heathcoat-Amory, David	Morris, M (N'hampton S)
Heseltine, Rt Hon Michael	Morrison, Sir Charles
Hicks, Mrs Maureen (Wolv' NE)	Moss, Malcolm
Hicks, Robert (Cornwall SE)	Moynihan, Hon Colin
Higgins, Rt Hon Terence L.	Mudd, David
Hill, James	Neale, Sir Gerrard
Hind, Kenneth	Needham, Richard
Hogg, Hon Douglas (Gr'th'm)	Nelson, Anthony
Hordern, Sir Peter	Neubert, Sir Michael
Howard, Rt Hon Michael	Newton, Rt Hon Tony
Howarth, Alan (Strat'd-on-A)	Nicholls, Patrick
Howarth, G. (Cannock & B'wd)	Nicholson, David (Taunton)
Howe, Rt Hon Sir Geoffrey	Nicholson, Emma (Devon West)
Howell, Rt Hon David (G'dford)	Norris, Steve
Howell, Ralph (North Norfolk)	Onslow, Rt Hon Cranley
Hughes, Robert G. (Harrow W)	Oppenheim, Phillip
Hunt, David (Wirral W)	Page, Richard
Hunt, Sir John (Ravensbourne)	Paice, James
Hurd, Rt Hon Douglas	Parkinson, Rt Hon Cecil
Irvine, Michael	Patnick, Irvine
Irving, Sir Charles	Patten, Rt Hon Chris (Bath)
Jack, Michael	Patten, Rt Hon John
Jackson, Robert	Pawsey, James
Janman, Tim	Porter, Barry (Wirral S)
Jessel, Toby	Porter, David (Waveney)
Johnson Smith, Sir Geoffrey	Portillo, Michael
Jones, Gwilym (Cardiff N)	Powell, William (Corby)
Jones, Robert B (Herts W)	Price, Sir David
Jopling, Rt Hon Michael	Raffan, Keith
Kellett-Bowman, Dame Elaine	Raison, Rt Hon Sir Timothy
Key, Robert	Redwood, John
King, Roger (B'ham N'thfield)	Renton, Rt Hon Tim
King, Rt Hon Tom (Bridgwater)	Rhodes James, Robert
Kirkhope, Timothy	Riddick, Graham
Knapman, Roger	Ridley, Rt Hon Nicholas
Knight, Greg (Derby North)	Ridsdale, Sir Julian
Knight, Dame Jill (Edgbaston)	Rifkind, Rt Hon Malcolm
Knowles, Michael	Roberts, Sir Wyn (Conwy)
Knox, David	Roe, Mrs Marion
Lamont, Rt Hon Norman	Rost, Peter
Lang, Rt Hon Ian	Rowe, Andrew
Lawrence, Ivan	Rumbold, Rt Hon Mrs Angela
Lawson, Rt Hon Nigel	Ryder, Rt Hon Richard
Lee, John (Pendle)	Sainsbury, Hon Tim
Leigh, Edward (Gainsbor'gh)	Sayeed, Jonathan
Lennox-Boyd, Hon Mark	Scott, Rt Hon Nicholas
Lester, Jim (Broxtowe)	Shaw, David (Dover)
Lilley, Peter	Shaw, Sir Giles (Pudsey)
Lloyd, Sir Ian (Havant)	Shaw, Sir Michael (Scarb')
Lord, Michael	Shelton, Sir William

Shephard, Mrs G. (Norfolk SW)	Tredinnick, David
Shepherd, Colin (Hereford)	Trippier, David
Shersby, Michael	Trotter, Neville
Sims, Roger	Twinn, Dr Ian
Skeet, Sir Trevor	Vaughan, Sir Gerard
Smith, Sir Dudley (Warwick)	Viggers, Peter
Smith, Tim (Beaconsfield)	Waldegrave, Rt Hon William
Soames, Hon Nicholas	Walden, George
Speed, Keith	Walker, Bill (T'side North)
Spicer, Sir Jim (Dorset W)	Walker, Rt Hon P. (W'cester)
Spicer, Michael (S Worcs)	Waller, Gary
Squire, Robin	Walters, Sir Dennis
Stanbrook, Ivor	Ward, John
Stanley, Rt Hon Sir John	Wardle, Charles (Bexhill)
Steen, Anthony	Warren, Kenneth
Stern, Michael	Watts, John
Stevens, Lewis	Wells, Bowen
Stewart, Allan (Eastwood)	Wheeler, Sir John
Stewart, Andy (Sherwood)	Whitney, Ray
Stewart, Rt Hon Ian (Herts N)	Widdecombe, Ann
Sumberg, David	Wiggin, Jerry
Summerson, Hugo	Wilkinson, John
Tapsell, Sir Peter	Wilshire, David
Taylor, Ian (Esher)	Wolfson, Mark
Taylor, Teddy (S'end E)	Wood, Timothy
Tebbit, Rt Hon Norman	Woodcock, Dr. Mike
Temple-Morris, Peter	Yeo, Tim
Thompson, D. (Calder Valley)	Young, Sir George (Acton)
Thompson, Patrick (Norwich N)	Younger, Rt Hon George
Thorne, Neil
Thurnham, Peter	Tellers for the Ayes:
Townsend, Cyril D. (B'heath)	Mr. John M. Taylor and
Tracey, Richard	Mr. Tom Sackville.
NOES
Abbott, Ms Diane	Clwyd, Mrs Ann
Adams, Mrs. Irene (Paisley, N.)	Cook, Robin (Livingston)
Allen, Graham	Corbett, Robin
Alton, David	Corbyn, Jeremy
Anderson, Donald	Cousins, Jim
Archer, Rt Hon Peter	Cox, Tom
Armstrong, Hilary	Crowther, Stan
Ashdown, Rt Hon Paddy	Cryer, Bob
Ashley, Rt Hon Jack	Cummings, John
Ashton, Joe	Cunliffe, Lawrence
Banks, Tony (Newham NW)	Dalyell, Tam
Barnes, Harry (Derbyshire NE)	Darling, Alistair
Barnes, Mrs Rosie (Greenwich)	Davies, Rt Hon Denzil (Llanelli)
Barron, Kevin	Davies, Ron (Caerphilly)
Battle, John	Davis, Terry (B'ham Hodge H'I)
Beckett, Margaret	Dewar, Donald
Beith, A. J.	Dixon, Don
Bell, Stuart	Douglas, Dick
Bellotti, David	Duffy, A. E. P.
Benn, Rt Hon Tony	Dunnachie, Jimmy
Bennett, A. F. (D'nt'n & R'dish)	Dunwoody, Hon Mrs Gwyneth
Benton, Joseph	Eadie, Alexander
Bermingham, Gerald	Evans, John (St Helens N)
Bevan, David Gilroy	Ewing, Harry (Falkirk E)
Bidwell, Sydney	Fatchett, Derek
Blair, Tony	Faulds, Andrew
Boateng, Paul	Field, Frank (Birkenhead)
Boyes, Roland	Fields, Terry (L'pool B G'n)
Bradley, Keith	Fisher, Mark
Bray, Dr Jeremy	Flynn, Paul
Brown, Gordon (D'mline E)	Foot, Rt Hon Michael
Brown, Nicholas (Newcastle E)	Foster, Derek
Brown, Ron (Edinburgh Leith)	Foulkes, George
Browne, John (Winchester)	Fraser, John
Bruce, Malcolm (Gordon)	Fyfe, Maria
Buckley, George J.	Galbraith, Sam
Caborn, Richard	Garrett, John (Norwich South)
Callaghan, Jim	Garrett, Ted (Wallsend)
Campbell, Menzies (Fife NE)	George, Bruce
Campbell, Ron (Blyth Valley)	Golding, Mrs Llin
Campbell-Savours, D. N.	Gordon, Mildred
Canavan, Dennis	Gould, Bryan
Cartwright, John	Graham, Thomas
Clarke, Tom (Monklands W)	Grant, Bernie (Tottenham)
Clelland, David	Griffiths, Nigel (Edinburgh S)

Griffiths, Win (Bridgend)	Loyden, Eddie
Grocott, Bruce	McAllion, John
Hardy, Peter	McAvoy, Thomas
Haynes, Frank	McCartney, Ian
Heal, Mrs Sylvia	Macdonald, Calum A.
Healey, Rt Hon Denis	McFall, John
Hinchliffe, David	McKay, Allen (Barnsley West)
Hoey, Ms Kate (Vauxhall)	McKelvey, William
Hogg, N. (C'nauld & Kilsyth)	McLeish, Henry
Home Robertson, John	Maclennan, Robert
Hood, Jimmy	McMaster, Gordon
Howarth, George (Knowsley N)	McNamara, Kevin
Howells, Geraint	McWilliam, John
Howells, Dr. Kim (Pontypridd)	Madden, Max
Hoyle, Doug	Mahon, Mrs Alice
Hughes, John (Coventry NE)	Marek, Dr John
Hughes, Robert (Aberdeen N)	Marshall, David (Shettleston)
Hughes, Roy (Newport E)	Marshall, Jim (Leicester S)
Hughes, Simon (Southwark)	Martin, Michael J. (Springburn)
Illsley, Eric	Martlew, Eric
Ingram, Adam	Maxton, John
Janner, Greville	Maxwell-Hyslop, Robin
Johnston, Sir Russell	Meacher, Michael
Jones, Barry (Alyn & Deeside)	Meale, Alan
Jones, Ieuan (Ynys Môn)	Michael, Alun
Jones, Martyn (Clwyd S W)	Michie, Bill (Sheffield Heeley)
Kaufman, Rt Hon Gerald	Michie, Mrs Ray (Arg'l & Bute)
Kennedy, Charles	Mitchell, Austin (G't Grimsby)
Kilfedder, James	Molyneaux, Rt Hon James
Kinnock, Rt Hon Neil	Moonie, Dr Lewis
Kirkwood, Archy	Morley, Elliot
Lambie, David	Morris, Rt Hon A. (W'shawe)
Lamond, James	Mowlam, Marjorie
Leadbitter, Ted	Mullin, Chris
Leighton, Ron	Murphy, Paul
Lestor, Joan (Eccles)	Nellist, Dave
Lewis, Terry	Oakes, Rt Hon Gordon
Litherland, Robert	O'Brien, William
Livingstone, Ken	O'Hara, Edward
Livsey, Richard	O'Neill, Martin
Lloyd, Tony (Stretford)	Orme, Rt Hon Stanley
Lofthouse, Geoffrey	Parry, Robert
Patchett, Terry	Smyth, Rev Martin (Belfast S)
Peacock, Mrs Elizabeth	Snape, Peter
Pendry, Tom	Soley, Clive
Pike, Peter L.	Spearing, Nigel
Powell, Ray (Ogmore)	Speller, Tony
Prescott, John	Steel, Rt Hon Sir David
Primarolo, Dawn	Steinberg, Gerry
Quin, Ms Joyce	Stott, Roger
Radice, Giles	Taylor, Mrs Ann (Dewsbury)
Randall, Stuart	Taylor, Rt Hon J. D. (S'ford)
Rees, Rt Hon Merlyn	Taylor, Matthew (Truro)
Reid, Dr John	Thomas, Dr Dafydd Elis
Richardson, Jo	Trimble, David
Robertson, George	Turner, Dennis
Robinson, Geoffrey	Wallace, James
Rooker, Jeff	Walley, Joan
Rooney, Terence	Wardell, Gareth (Gower)
Ross, Ernie (Dundee W)	Wareing, Robert N.
Rowlands, Ted	Watson, Mike (Glasgow, C)
Ruddock, Joan	Welsh, Andrew (Angus E)
Salmond, Alex	Wigley, Dafydd
Sedgemore, Brian	Williams, Rt Hon Alan
Sheerman, Barry	Williams, Alan W. (Carm'then)
Sheldon, Rt Hon Robert	Wilson, Brian
Shepherd, Richard (Aldridge)	Winnick, David
Shore, Rt Hon Peter	Winterton, Nicholas
Short, Clare	Wise, Mrs Audrey
Sillars, Jim	Worthington, Tony
Skinner, Dennis	Wray, Jimmy
Smith, Andrew (Oxford E)
Smith, C. (Isl'ton & F'bury)	Tellers for the Noes:
Smith, Rt Hon J. (Monk'ds E)	Mr. Jack Thompson and
Smith, J. P. (Vale of Glam)	Mr. Ken Eastham.

Division No. 58]	[7.32 pm
AYES
Adley, Robert	Couchman, James
Aitken, Jonathan	Critchley, Julian
Alexander, Richard	Currie, Mrs Edwina
Alison, Rt Hon Michael	Curry, David
Allason, Rupert	Davies, Q. (Stamf'd & Spald'g)
Amery, Rt Hon Julian	Davis, David (Boothferry)
Amess, David	Day, Stephen
Amos, Alan	Devlin, Tim
Arbuthnot, James	Dickens, Geoffrey
Arnold, Sir Thomas	Dorrell, Stephen
Ashby, David	Douglas-Hamilton, Lord James
Aspinwall, Jack	Dunn, Bob
Atkins, Robert	Durant, Sir Anthony
Atkinson, David	Dykes, Hugh
Baker, Nicholas (Dorset N)	Eggar, Tim
Baldry, Tony	Emery, Sir Peter
Banks, Robert (Harrogate)	Evans, David (Welwyn Hatf'd)
Batiste, Spencer	Evennett, David
Bellingham, Henry	Fallon, Michael
Bendall, Vivian	Favell, Tony
Bennett, Nicholas (Pembroke)	Fenner, Dame Peggy
Benyon, W.	Fishburn, John Dudley
Biffen, Rt Hon John	Fookes, Dame Janet
Blackburn, Dr John G.	Forman, Nigel
Blaker, Rt Hon Sir Peter	Forsyth, Michael (Stirling)
Body, Sir Richard	Forth, Eric
Bonsor, Sir Nicholas	Fowler, Rt Hon Sir Norman
Boscawen, Hon Robert	Fox, Sir Marcus
Boswell, Tim	Franks, Cecil
Bottomley, Peter	Freeman, Roger
Bottomley, Mrs Virginia	French, Douglas
Bowden, A (Brighton K'pto'n)	Fry, Peter
Bowden, Gerald (Dulwich)	Gale, Roger
Bowis, John	Gardiner, Sir George
Boyson, Rt Hon Dr Sir Rhodes	Garel-Jones, Tristan
Brandon-Bravo, Martin	Gilmour, Rt Hon Sir Ian
Brazier, Julian	Glyn, Dr Sir Alan
Bright, Graham	Goodlad, Alastair
Brooke, Rt Hon Peter	Gorman, Mrs Teresa
Brown, Michael (Brigg & Cl't's)	Gorst, John
Bruce, Ian (Dorset South)	Grant, Sir Anthony (CambsSW)
Buck, Sir Antony	Green way, Harry (Ealing N)
Budgen, Nicholas	Greenway, John (Ryedale)
Burns, Simon	Gregory, Conal
Burt, Alistair	Griffiths, Peter (Portsmouth N)
Butler, Chris	Grist, Ian
Butterfill, John	Ground, Patrick
Carlisle, John, (Luton N)	Grylls, Michael
Carlisle, Kenneth (Lincoln)	Hague, William
Carrington, Matthew	Hamilton, Hon Archie (Epsom)
Cash, William	Hamilton, Neil (Tatton)
Chalker, Rt Hon Mrs Lynda	Hampson, Dr Keith
Chapman, Sydney	Hanley, Jeremy
Chope, Christopher	Hannam, John
Churchill, Mr	Hargreaves, A. (B'ham H'll Gr')
Clark, Rt Hon Alan (Plymouth)	Hargreaves, Ken (Hyndburn)
Clark, Dr Michael (Rochford)	Harris, David
Clark, Rt Hon Sir William	Haselhurst, Alan
Clarke, Rt Hon K. (Rushcliffe)	Hayes, Jerry
Conway, Derek	Hayhoe, Rt Hon Sir Barney
Coombs, Anthony (Wyre F'rest)	Hayward, Robert
Coombs, Simon (Swindon)	Heathcoat-Amory, David
Cope, Rt Hon John	Heseltine, Rt Hon Michael
Cormack, Patrick	Hicks, Mrs Maureen (Wolv' NE)

Hicks, Robert (Cornwall SE)	Moss, Malcolm
Higgins, Rt Hon Terence L.	Moynihan, Hon Colin
Hill, James	Mudd, David
Hind, Kenneth	Neale, Sir Gerrard
Hogg, Hon Douglas (Gr'th'm)	Needham, Richard
Hordern, Sir Peter	Nelson, Anthony
Howard, Rt Hon Michael	Neubert, Sir Michael
Howarth, Alan (Strat'd-on-A)	Newton, Rt Hon Tony
Howarth, G. (Cannock & B'wd)	Nicholls, Patrick
Howe, Rt Hon Sir Geoffrey	Nicholson, David (Taunton)
Howell, Rt Hon David (G'dford)	Nicholson, Emma (Devon West)
Howell, Ralph (North Norfolk)	Norris, Steve
Hughes, Robert G. (Harrow W)	Onslow, Rt Hon Cranley
Hunt, David (Wirral W)	Oppenheim, Phillip
Hunt, Sir John (Ravensbourne)	Page, Richard
Hurd, Rt Hon Douglas	Paice, James
Irvine, Michael	Patnick, Irvine
Irving, Sir Charles	Patten, Rt Hon Chris (Bath)
Jack, Michael	Patten, Rt Hon John
Jackson, Robert	Pawsey, James
Janman, Tim	Peacock, Mrs Elizabeth
Jessel, Toby	Porter, Barry (Wirral S)
Johnson Smith, Sir Geoffrey	Porter, David (Waveney)
Jones, Gwilym (Cardiff N)	Portillo, Michael
Jones, Robert B (Herts W)	Powell, William (Corby)
Jopling, Rt Hon Michael	Price, Sir David
Kellett-Bowman, Dame Elaine	Raffan, Keith
Key, Robert	Raison, Rt Hon Sir Timothy
King, Roger (B'ham N'thfield)	Redwood, John
King, Rt Hon Tom (Bridgwater)	Renton, Rt Hon Tim
Kirkhope, Timothy	Rhodes James, Robert
Knapman, Roger	Riddick, Graham
Knight, Greg (Derby North)	Ridley, Rt Hon Nicholas
Knight, Dame Jill (Edgbaston)	Ridsdale, Sir Julian
Knowles, Michael	Rifkind, Rt Hon Malcolm
Knox, David	Roberts, Sir Wyn (Conwy)
Lamont, Rt Hon Norman	Roe, Mrs Marion
Lang, Rt Hon Ian	Rost, Peter
Lawrence, Ivan	Rowe, Andrew
Lawson, Rt Hon Nigel	Rumbold, Rt Hon Mrs Angela
Lee, John (Pendle)	Ryder, Rt Hon Richard
Leigh, Edward (Gainsbor'gh)	Sainsbury, Hon Tim
Lennox-Boyd, Hon Mark	Sayeed, Jonathan
Lester, Jim (Broxtowe)	Scott, Rt Hon Nicholas
Lilley, Peter	Shaw, David (Dover)
Lloyd, Sir Ian (Havant)	Shaw, Sir Giles (Pudsey)
Lloyd, Peter (Fareham)	Shaw, Sir Michael (Scarb')
Lord, Michael	Shelton, Sir William
Lyell, Rt Hon Sir Nicholas	Shephard, Mrs G. (Norfolk SW)
Macfarlane, Sir Neil	Shepherd, Colin (Hereford)
MacGregor, Rt Hon John	Shersby, Michael
MacKay, Andrew (E Berkshire)	Sims, Roger
Maclean, David	Skeet, Sir Trevor
McLoughlin, Patrick	Smith, Sir Dudley (Warwick)
McNair-Wilson, Sir Michael	Smith, Tim (Beaconsfield)
McNair-Wilson, Sir Patrick	Soames, Hon Nicholas
Madel, David	Speed, Keith
Malins, Humfrey	Spicer, Sir Jim (Dorset W)
Mans, Keith	Spicer, Michael (S Worcs)
Maples, John	Squire, Robin
Marland, Paul	Stanbrook, Ivor
Marlow, Tony	Stanley, Rt Hon Sir John
Marshall, John (Hendon S)	Steen, Anthony
Marshall, Sir Michael (Arundel)	Stern, Michael
Martin, David (Portsmouth S)	Stevens, Lewis
Mates, Michael	Stewart, Allan (Eastwood)
Maude, Hon Francis	Stewart, Andy (Sherwood)
Mawhinney, Dr Brian	Stewart, Rt Hon Ian (Herts N)
Mayhew, Rt Hon Sir Patrick	Sumberg, David
Mellor, Rt Hon David	Summerson, Hugo
Meyer, Sir Anthony	Tapsell, Sir Peter
Miller, Sir Hal	Taylor, Ian (Esher)
Miscampbell, Norman	Taylor, Teddy (S'end E)
Mitchell, Andrew (Gedling)	Tebbit, Rt Hon Norman
Mitchell, Sir David	Temple-Morris, Peter
Moate, Roger	Thompson, D. (Calder Valley)
Monro, Sir Hector	Thompson, Patrick (Norwich N)
Montgomery, Sir Fergus	Thorne, Neil
Morris, M (N'hampton S)	Thurnham, Peter
Morrison, Sir Charles	Townsend, Cyril D. (B'heath)

Tracey, Richard	Wells, Bowen
Tredinnick, David	Wheeler, Sir John
Trotter, Neville	Whitney, Ray
Twinn, Dr Ian	Widdecombe, Ann
Vaughan, Sir Gerard	Wiggin, Jerry
Viggers, Peter	Wilkinson, John
Wakeham, Rt Hon John	Wilshire, David
Waldegrave, Rt Hon William	Wolfson, Mark
Walden, George	Wood, Timothy
Walker, Bill (T'side North)	Woodcock, Dr. Mike
Walker, Rt Hon P. (W'cester)	Yeo, Tim
Waller, Gary	Young, Sir George (Acton)
Walters, Sir Dennis	Younger, Rt Hon George
Ward, John
Wardle, Charles (Bexhill)	Tellers for the Ayes:
Warren, Kenneth	Mr. John M. Taylor and
Watts, John	Mr. Tom Sackville.
NOES
Abbott, Ms Diane	Dixon, Don
Adams, Mrs. Irene (Paisley, N.)	Douglas, Dick
Allen, Graham	Duffy, A. E. P.
Alton, David	Dunnachie, Jimmy
Anderson, Donald	Dunwoody, Hon Mrs Gwyneth
Archer, Rt Hon Peter	Eadie, Alexander
Armstrong, Hilary	Evans, John (St Helens N)
Ashdown, Rt Hon Paddy	Ewing, Harry (Falkirk E)
Ashley, Rt Hon Jack	Fatchett, Derek
Ashton, Joe	Faulds, Andrew
Banks, Tony (Newham NW)	Field, Frank (Birkenhead)
Barnes, Harry (Derbyshire NE)	Fields, Terry (L'pool B G'n)
Barnes, Mrs Rosie (Greenwich)	Fisher, Mark
Barron, Kevin	Flynn, Paul
Battle, John	Foot, Rt Hon Michael
Beckett, Margaret	Foster, Derek
Beith, A. J.	Foulkes, George
Bell, Stuart	Fraser, John
Bellotti, David	Fyfe, Maria
Benn, Rt Hon Tony	Galbraith, Sam
Bennett, A. F. (D'nt'n & R'dish)	Garrett, John (Norwich South)
Benton, Joseph	Garrett, Ted (Wallsend)
Bermingham, Gerald	George, Bruce
Bevan, David Gilroy	Golding, Mrs Llin
Bidwell, Sydney	Gordon, Mildred
Blair, Tony	Gould, Bryan
Boateng, Paul	Graham, Thomas
Boyes, Roland	Grant, Bernie (Tottenham)
Bradley, Keith	Griffiths, Nigel (Edinburgh S)
Bray, Dr Jeremy	Griffiths, Win (Bridgend)
Brown, Gordon (D'mline E)	Grocott, Bruce
Brown, Nicholas (Newcastle E)	Hardy, Peter
Brown, Ron (Edinburgh Leith)	Haynes, Frank
Bruce, Malcolm (Gordon)	Heal, Mrs Sylvia
Buckley, George J.	Healey, Rt Hon Denis
Caborn, Richard	Hinchliffe, David
Callaghan, Jim	Hoey, Ms Kate (Vauxhall)
Campbell, Menzies (Fife NE)	Hogg, N. (C'nauld & Kilsyth)
Campbell, Ron (Blyth Valley)	Home Robertson, John
Campbell-Savours, D. N.	Hood, Jimmy
Canavan, Dennis	Howarth, George (Knowsley N)
Carlile, Alex (Mont'g)	Howells, Geraint
Cartwright, John	Howells, Dr. Kim (Pontypridd)
Clarke, Tom (Monklands W)	Hoyle, Doug
Clelland, David	Hughes, John (Coventry NE)
Clwyd, Mrs Ann	Hughes, Robert (Aberdeen N)
Cook, Robin (Livingston)	Hughes, Roy (Newport E)
Corbett, Robin	Hughes, Simon (Southwark)
Corbyn, Jeremy	Illsley, Eric
Cousins, Jim	Ingram, Adam
Cox, Tom	Janner, Greville
Crowther, Stan	Johnston, Sir Russell
Cryer, Bob	Jones, Barry (Alyn & Deeside)
Cummings, John	Jones, leuan (Ynys Môn)
Cunliffe, Lawrence	Jones, Martyn (Clwyd S W)
Dalyell, Tam	Kaufman, Rt Hon Gerald
Darling, Alistair	Kennedy, Charles
Davies, Rt Hon Denzil (Llanelli)	Kilfedder, James
Davies, Ron (Caerphilly)	Kinnock, Rt Hon Neil
Davis, Terry (B'ham Hodge H'I)	Kirkwood, Archy
Dewar, Donald	Lambie, David

Lamond, James	Quin, Ms Joyce
Leadbitter, Ted	Radice, Giles
Leighton, Ron	Randall, Stuart
Lestor, Joan (Eccles)	Rees, Rt Hon Merlyn
Lewis, Terry	Reid, Dr John
Litherland, Robert	Richardson, Jo
Livingstone, Ken	Robertson, George
Livsey, Richard	Robinson, Geoffrey
Lloyd, Tony (Stretford)	Rooker, Jeff
Lofthouse, Geoffrey	Rooney, Terence
Loyden, Eddie	Ross, Ernie (Dundee W)
McAllion, John	Rowlands, Ted
McAvoy, Thomas	Ruddock, Joan
McCartney, Ian	Salmond, Alex
Macdonald, Calum A.	Sedgemore, Brian
McFall, John	Sheerman, Barry
McKay, Allen (Barnsley West)	Sheldon, Rt Hon Robert
McKelvey, William	Shepherd, Richard (Aldridge)
McLeish, Henry	Shore, Rt Hon Peter
Maclennan, Robert	Short, Clare
McMaster, Gordon	Sillars, Jim
McNamara, Kevin	Skinner, Dennis
McWilliam, John	Smith, Andrew (Oxford E)
Madden, Max	Smith, C. (Isl'ton & F'bury)
Mahon, Mrs Alice	Smith, Rt Hon J. (Monk'ds E)
Marek, Dr John	Smith, J. P. (Vale of Glam)
Marshall, David (Shettloston)	Smyth, Rev Martin (Belfast S)
Marshall, Jim (Leicester S)	Snape, Peter
Martin, Michael J. (Springburn)	Soley, Clive
Martlew, Eric	Spearing, Nigel
Maxton, John	Speller, Tony
Maxwell-Hyslop, Robin	Steel, Rt Hon Sir David
Meacher, Michael	Steinberg, Gerry
Meale, Alan	Stott, Roger
Mellor, Rt Hon David	Taylor, Mrs Ann (Dewsbury)
Michael, Alun	Taylor, Rt Hon J. D. (S'ford)
Michie, Bill (Sheffield Heeley)	Taylor, Matthew (Truro)
Michie, Mrs Ray (Arg'l & Bute)	Thomas, Dr Dafydd Elis
Mitchell, Austin (G't Grimsby)	Trimble, David
Molyneaux, Rt Hon James	Turner, Dennis
Moonie, Dr Lewis	Wallace, James
Morley, Elliot	Walley, Joan
Morris, Rt Hon A. (W'shawe)	Warden, Gareth (Gower)
Mowlam, Marjorie	Wareing, Robert N.
Mullin, Chris	Watson, Mike (Glasgow, C)
Murphy, Paul	Welsh, Andrew (Angus E)
Nellist, Dave	Wigley, Dafydd
Oakes, Rt Hon Gordon	Williams, Rt Hon Alan
O'Brien, William	Williams, Alan W. (Carm'then)
O'Hara, Edward	Wilson, Brian
O'Neill, Martin	Winnick, David
Orme, Rt Hon Stanley	Winterton, Nicholas
Parry, Robert	Wise, Mrs Audrey
Patchett, Terry	Worthington, Tony
Peacock, Mrs Elizabeth	Wray, Jimmy
Pendry, Tom
Pike, Peter L.	Tellers for the Noes:
Powell, Ray (Ogmore)	Mr. Jack Thompson and
Prescott, John	Mr. Ken Eastham.
Primarolo, Dawn

Question accordingly agreed to.

Amendments (b) and (c) to the Lords amendment agreed to.

Lords amendment, as amended, agreed to.—[Special entry.]

Lords amendments Nos. 8 and 9 agreed to.

Ordered, That a Committee be appointed to draw up a reason to be assigned to the Lords for disagreeing to their amendment No. 3.—[Mr. Chapman.]

Ordered, That Mr. Secretary Newton, Mr. Nicholas Scott, Mr. Irvine Patnick, Mr. Alfred Morris and Mr. Allen McKay be members of the Committee.—[Mr. Chapman.]

Ordered, That three be the quorum of the Committee.—[Mr. Chapman.]

Ordered, That the Committee do withdraw immediately.—[Mr. Chapman.]

Reason for disagreeing to one of the Lords amendments reported, and agreed to; to be communicated to the Lords.